Which Method Uses an Aging of Accounts Receivable to Calculate

question 85

Multiple Choice

Which method uses an aging of Accounts Receivable to calculate the Bad Debts Expense?

• A)Income statement approach
• B)Aging the Accounts Receivable approach
• C)Balance sheet approach
• D)Direct write-off

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Definitions:

Ending Inventory

The value of goods available for sale at the end of the accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Ethics Violation

An action that goes against moral principles or professional standards, often resulting in disciplinary action.

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by calculating a cost-to-retail percentage and applying it to the ending retail value of inventory.

Inventory Valuation

The method of calculating the cost associated with inventory at the end of an accounting period to determine the cost of goods sold and inventory on hand.