The Method in Which Companies Use Two Entries to Account

question 2

Short Answer

The method in which companies use two entries to account for bad debt expense- one to estimate the expense and a second to write off receivables is the ____________________.

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Definitions:

Economic Profit

The difference between the total revenue received by a firm and the total cost of all resources used, including opportunity costs.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision. It represents the benefits an individual, investor or business misses out on when choosing one alternative over another.

Implicit Rate

The implied rate of return that is not explicitly stated, often used in the context of comparing the cost of borrowing to the rate of return on investments.

Equity Capital

The amount of money that is invested in a company by its owners, in exchange for ownership interest or shares.