Accountıng I Deneme Sınavı Sorusu #1313925
When are uncollectible account receivables written-off?
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When the company cannot credit Account Receivable and making an offsetting debit to Allowance for Doubtful Debts account. |
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When particular account receivable is categorized as an asset in the records |
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Whenever a company becomes sure that a particular customer will not be able to repay and hence that account receivable would be uncollectible. |
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When the Allowance for Doubtful Debts account is not debited instead of the Uncollectible Accounts Expense account. |
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When the forecasted expense of credit losses is not debited to the uncollectible accounts receivable |
One important issue regarding allowances is how to record the written-off uncollectible account receivables. Whenever a company becomes sure that a particular customer will not be able to repay and hence that account receivable would be uncollectible, then that particular account receivable will no longer be categorized as an asset, so it has to be written off from the books. This write-off means to deduct the receivables balance of that specific customer’s account to nil. The company credit Account Receivable and making an offsetting debit to Allowance for Doubtful Debts account. C is the right answer.
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