Your Company Previously Averaged About 20% of Its Total Accounts

question 134

Multiple Choice

Your company previously averaged about 20% of its total accounts receivable in the "over 90 days past due" category and now has 35% in this category.All else equal,using the aging of accounts receivable method,the amount of the bad debt adjustment will:

• A)decline,thus increasing the ending balance of the allowance account.
• B)increase,thus increasing the ending balance of the allowance account.
• C)decline,thus reducing the ending balance of the allowance account.
• D)increase,thus reducing the ending balance of the allowance account.

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Definitions:

Customer Loyalty

The likelihood of previous customers to continue buying products or services from a specific business due to satisfaction with the product or service, convenience, or familiarity.

Profit Margins

The difference between the cost of goods sold and the sales revenue, expressed as a percentage of sales revenue, indicating the profitability of a product or business.

Sales Volume

The total number of units sold within a specified time period, often used as a measure of business performance.

Ethical Conduct

Adherence to moral principles and standards of behavior in professional and personal actions.