Which of the Following Answers Correctly Describes the Effect of the Collection

question 67

Multiple Choice

Which of the following answers correctly describes the effect of the collection of cash from the credit card company on the financial statements of Yancey Corporation?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Write-off

The accounting action of declaring that an asset or receivable value is reduced or eliminated, often due to uncollectibility or obsolescence.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the amount of receivables that may not be collectible.

Accounts Receivable

The total amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Direct Write-off Method

The Direct Write-off Method is an accounting approach where uncollectible debts are charged directly to expense as they are identified, without creating an allowance for doubtful accounts.