Answer:
The statement is True as well as correct
Explanation:
Allowance method is the financial term which is defined as the uncollectible accounts receivable procedure that reports the estimate of the bad debt expense in the same accounting or fiscal year as the sale.
Under this method, it is used to adjust the accounts receivable which appears on the balance sheet.
For example,
If the company has the credit sales of $800,000 in December and estimate that the 4% will be uncollectible. Then using this method, computing the uncollectible as:
Bad debt expense = Sales × Estimate uncollectible
= $800,000 × 4%
= $32,000
So, this estimate the bad debt expense rather than wait to see which customer will not able to collect.
Answer:
The resulting rise in unemployment is mostly a rise in __cyclical____ unemployment because it is related to the state of the economy.
Explanation:
Frictional unemployment occurs as a result of workers' search for or transition to new jobs. It is brief and does not leave a mark on the economy. Structural unemployment comes about when the skills of workers do not match the requirements of employers. Therefore, workers require retraining and reskilling. Cyclical unemployment relates to the macro-economic situation that is prevailing during periods of recession.
Answer:
It will reduce the amount of dividiends it can pay.
Explanation:
As there is an amount of the retained earnings that is restricted the company cannot use them to pay up neither stock or cash dividends in the future.
The retained earnings are used to pay dividends but also, are part of the equity of the firm thus the RE count to the capital structure of the company . Loans can be obtained with better rates if thecapital structure is more based on equiy than in liabilities thus, the board of directors is planning ahead the future plant exansion avoiding to use cash and deteriorate his capital structure to pay up dividends.
Yes, there are many savings accounts you can't touch for a period of time
Bad debt expense is an operating expense. An increase in operating expenses decreases income from operations.
When a receivable is no longer collectible as a result of a customer's inability to pay an outstanding debt due to bankruptcy or other financial issues, a bad debt expense is recorded. Companies that offer credit to their customers record bad debts as an allowance for doubtful accounts, also referred to as a provision for credit losses, on their balance sheet.
The basic idea behind bad debt expense is the same as that behind all accounting principles: it enables businesses to completely and accurately report their financial position. Almost every business will encounter a customer who is unable to pay at some point, and they will need to record a bad debt expense.
Learn more about bad debt here:
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