Which one of the following statements concerning bad debt expenses is correct? Select one: a. When you write off an accounts receivable, you debit bad debt expense and credit accounts receivable. b. You record bad debt expense when individual accounts receivable becomes uncollectible. c. Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts. d. When the allowance method is used, bad debt expense is recorded before the accounts are written off.
Which one of the following statements concerning bad debt expenses is correct? Select one: a. When you write off an accounts receivable, you debit bad debt expense and credit accounts receivable. b. You record bad debt expense when individual accounts receivable becomes uncollectible. c. Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts. d. When the allowance method is used, bad debt expense is recorded before the accounts are written off.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Which one of the following statements concerning bad debt expenses is correct?
Select one:
a.
When you write off an accounts receivable , you debit bad debt expense and credit accounts receivable.
b.
You record bad debt expense when individual accounts receivable becomes uncollectible.
c.
Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts.
d.
When the allowance method is used, bad debt expense is recorded before the accounts are written off.
Transcribed Image Text:Which one of the following statements concerning bad debt expenses is
correct?
Select one:
When you write off an accounts receivable, you debit bad debt
expense and credit accounts receivable.
O b. You record bad debt expense when individual accounts receivable
becomes uncollectible.
Under the percentage of receivables method, bad debt expense is
the year-end receivables multiplied by the % of uncollectible
accounts.
O d. When the allowance method is used, bad debt expense is recorded
before the accounts are written off.
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