When a loan is considered uncollectible, the bank's accounting department will write (charge) it off the books by reducing the and the accounts. Which choice below correctly fills in the blanks in the preceding sentence? A. PLL, gross loans B. ALL, net loans C. ALL, gross loans D. PLL, net loans E. None of the above.

C. ALL, gross loans

Explanation:

A promissory agreement can be defined as an evidence of a debt and as such involves the use of a legal financial tool such as a promissory note as a written promise to declare that a party (borrower) would pay another (lender) at a specific period of time.

On the other hand, a deed of trust can be defined as a legal document used by a party (borrower) to pledge his or her property to another party (lender) as guarantee or collateral for the repayment of a loan. The deed of trust is typically made up of three (3) parties; the lender, borrower and a trustee.

When a loan is considered uncollectible, the bank's accounting department will write (charge) it off the books by reducing the ALL and the gross loans accounts. This is usually done in order to make the business attractive to potential investors or creditors and so as to reduce their tax liabilities.

Hence, when the payment for a particular debt is unrecoverable or uncollectible, it is often written off (charge-off) and subsequently removed as assets from the balance sheet.