The Use of the Estimated Bad Debt Expense and Allowance

question 46

Multiple Choice

The use of the estimated bad debt expense and allowance accounts is required under which accounting concept?

• A)The revenue recognition principle
• B)The matching principle
• C)The materiality constraint
• D)The unit of measure assumption

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Definitions:

Variable Costing

An accounting approach where only variable production costs are assigned to inventory, distinguishing it from absorption costing by treating fixed overhead as a period cost.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net income or loss.

Variable Costing

An accounting method that only assigns variable costs to inventory, excluding fixed manufacturing overhead costs.

Unit Product Cost

The total cost (both direct and indirect) associated with producing a single unit of product.