Simplifying Assumptions Identified for the Use of Cost Behavior Pattern

question 50

Multiple Choice

Simplifying assumptions identified for the use of cost behavior pattern data include:

• A)relevant range and liquidity.
• B)fixed activity and linearity.
• C)linearity and relevant range.
• D)fixed range and variability.

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Definitions:

Allowance Method

An approach in accounting that calculates expected losses from bad debts by assessing uncollectible accounts at the conclusion of each period.

Estimated Bad Debts

A provision in accounting for the amount of receivables that are expected not to be collected, considered an expense.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's receivables are turned over during a period.

Specific Accounts

Refers to accounts designated for specific purposes or transactions, distinguishing them from general or combined accounts.