When the Bad Debt Estimate Is Based on the Assumption

question 4

Multiple Choice

When the bad debt estimate is based on the assumption that the amount of bad debt is a function of the total sales made on credit,this method is known as

• A)the direct writeoff method.
• B)the percentage receivables method.
• C)the percentage of credit sales method.
• D)aging of accounts receivable method.

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Definitions:

Vicarious Liability

A legal principle wherein one party is held liable for the actions of another party, often used in employer-employee relationships.

Legal Responsibility

The obligation to act in accordance with the law and be accountable for one's actions in a legal context.

Acts of Another

Legal principle referring to the actions of a person that can affect the legal rights or responsibilities of another person.

Twelve-Month Period

A continuous period of twelve months that may be used for measurement or as a condition for certain legal and employment matters.