A Company Is Using the Percentage-Of-Credit-Sales Method to Estimate Their

question 56

Multiple Choice

A company is using the percentage-of-credit-sales method to estimate their bad debts and has noticed that over the past few years there has been a build-up of a credit balance in the Allowance for uncollectible accounts.Which of the following is most likely the cause?

• A)They have been consistently overestimating the bad debt expense.
• B)They have been consistently underestimating the bad debt expense.
• C)They have written off too many accounts.
• D)They have been selling fewer items on credit

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Definitions:

Tort Law

The area of law that covers most civil suits, except breach of contract, focusing on personal injuries and damages to property.

Tort

An act that is not criminal but leads to harm or loss for the victim, thereby making the perpetrator legally responsible under tort law.

Malfeasance

An act of illegal or wrongful conduct, especially when performed by a public official or a figure of authority.

Misfeasance

An act that is legal but performed improperly or with wrong intention, potentially causing harm or damage.