The Two Methods of Accounting for Uncollectible Receivables Are the Direct

question 103

Multiple Choice

The two methods of accounting for uncollectible receivables are the direct write-off method and the:

• A) equity method.
• B) cash method.
• C) interest method.
• D) allowance method.

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Definitions:

MC = MR

The principle that profit maximization occurs when a firm's marginal cost (MC) equals its marginal revenue (MR).

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the surplus revenue after accounting for all costs.

Economic Loss

A situation where total costs exceed total revenues, indicating that a firm is not covering its opportunity costs.

Accounting Profit

The calculated income of a business or company after subtracting all explicit costs from total revenues.