The Costs of Negotiating, Monitoring, and Governing Exchanges Between People

question 81

Multiple Choice

The costs of negotiating, monitoring, and governing exchanges between people are known as the ________ costs.

• A) transaction
• B) historical
• C) sunk
• D) opportunity

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Definitions:

Bad Debt Expense

The cost associated with accounts receivable that a company is unable to collect.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of receivables that may not be collected.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or completion, used to assess inventory value under GAAP standards.

Aging of Accounts Receivable

A method to manage and review accounts receivable based on the length of time invoices have been outstanding, typically to identify and act on overdue payments.