Refer to the Following Figure for the Questions That Follow

question 67

Multiple Choice

Refer to the following figure for the questions that follow.

-The opportunity cost of increasing the production of apple pies from 12 to 14 pies is:

• A) 2 blueberry pies.
• B) 14 apple pies.
• C) 7 blueberry pies.
• D) 4 blueberry pies.
• E) 2 apple pies.

---

Definitions:

Balance Sheet Approach

A method used to calculate the amount required in the Allowance for Doubtful Accounts to cover expected uncollectibles. This method is based on the Accounts Receivable amount and the aging process. The adjustment to the Allowance for Doubtful Accounts will bring the new balance of that account to the new required level.

Bad Debts Expense

The portion of receivables that a company does not expect to collect and writes off as a loss.

Gross Accounts Receivable

The total amount owed to a company by its customers for goods or services sold on credit before any deductions for returns or allowances.

Aging of Accounts Receivable

The process of categorizing accounts receivable according to the length of time an invoice has been outstanding.