A Company That Uses the Allowance Method to Account for Uncollectible

question 43

Multiple Choice

A company that uses the allowance method to account for uncollectible accounts

• A)Reports the net realizable value of its accounts receivable on the balance sheet.
• B)Does not record uncollectible accounts until the amount becomes significant.
• C)Records Uncollectible Accounts Expense when a receivable is written off.
• D)None of these.

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Definitions:

Disinterested Directors

Board members who do not have a personal financial interest in a corporate decision, ensuring unbiased governance.

Quorum Of The Board

The minimum number of board members that must be present at a meeting to legally conduct business.

Nonprofit Corporation

A legal entity organized and operated for a collective, public or social benefit, rather than to generate profit for owners or investors.

Business Judgment Rule

A legal principle that shields corporate executives from liability for decisions made in good faith and with the belief that they were in the best interest of the company.