Which of the following statements correctly describes when an account is considered uncollectible?

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Multiple Choice

Which of the following statements correctly describes when an account is considered uncollectible?

The statement describes the status of a receivable when collection is no longer expected. An account is considered uncollectible when you don’t expect to collect the amount owed from the customer. This is a classification of the balance, not the action taken. The actual step to remove it from the books is a write-off, which records the loss and reduces accounts receivable. Active would mean the debt is current and expected to be collected; dormant means the account is inactive but not necessarily deemed uncollectible. So the term that best fits “when an account is uncollectible” is the designation uncollectible itself.

The statement describes the status of a receivable when collection is no longer expected. An account is considered uncollectible when you don’t expect to collect the amount owed from the customer. This is a classification of the balance, not the action taken. The actual step to remove it from the books is a write-off, which records the loss and reduces accounts receivable. Active would mean the debt is current and expected to be collected; dormant means the account is inactive but not necessarily deemed uncollectible. So the term that best fits “when an account is uncollectible” is the designation uncollectible itself.

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