Prior to Year-End Adjusting Entries,what Would Explain the Allowance for Uncollectible

question 61

Multiple Choice

Prior to year-end adjusting entries,what would explain the Allowance for Uncollectible Accounts having a debit balance?

• A)The amount of cash collections from customers in the current year was less the amount of cash collections from customers in the prior year.
• B)The amount of actual uncollectible accounts in the current year was less than the estimate of uncollectible accounts made at the end of the prior year.
• C)The amount of credit sales in the current year was greater than the amount of credit sales made in the prior year.
• D)The amount of actual uncollectible accounts in the current year was greater than the estimate of uncollectible accounts made at the end of the prior year.

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Definitions:

Annual Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue in a fiscal year.

Tax Rate

The segment of an individual's or corporate's earnings or profits that is taxed.

Net Working Capital

Net working capital is a measure of a company's liquidity, calculated as the difference between its current assets and current liabilities.

Inventory

The total amount of goods and materials held by a business to be sold or used in production, including raw materials, work-in-progress, and finished goods.