The Method for Estimating Bad Debts Under the Allowance Method

question 32

Multiple Choice

The method for estimating bad debts under the allowance method that focuses on the balance sheet rather than the income statement is based on

• A)a direct write-off.
• B)an aging of the receivables.
• C)credit sales.
• D)net sales.

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Definitions:

Subsidy

A form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policies.

Labor-Intensive Goods

Products or services that require a relatively high amount of labor compared to capital in their production or delivery processes.

Factor Endowments

Economic term for the amount and type of resources possessed by a country, such as land, labor, and capital, which contribute to its productive capacity.

World Trade

The exchange of goods, services, and capital between countries and territories across the globe, fostering economic integration and development.