Question

Previous Page Question 6 (1 point) Lack of long-term solvency refers to: Long-term assets. The length of time becfore long-term debt becomes duce. Risk of nonpayment of long-term liabilities The ability to refinance long-term debt when it becomes due. Previous Page Next Page Submit Quiz 0 of 15 questions saved

Answer 1

Solvency means company’s long run financial viability and its ability to meet long term obligations and continues the business and operations into foreseeable future. Solvency ratios are more focus on the long term sustainability of a company rather than the current issues.

Insolvency is a situation which arises due to inability to pay off the debts due to insufficient assets.

From this explanation Lack of long term solvency refers to Risk of non-payment of long term liabilities.

OPTION :-C

The Allowance for uncollectable account is the estimated amount of bad Debt that will arise from accounts receivable that have been issued but not yet collected. Allowance for uncollectable account is created by forming a credit balance which is net off against the total account receivables in balance sheet. Allowance for uncollectable account also known as provision for bad debts.

Accounting entry for Allowance for uncollectable account is as follows

So Allowance for uncollectable account is on the face of Balance sheet.