Bad Debt Expense Is Considered

question 236

Multiple Choice

Bad Debt Expense is considered

• A) an avoidable cost in doing business on a credit basis.
• B) an internal control weakness.
• C) a necessary risk of doing business on a credit basis.
• D) avoidable unless there is a recession.

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Definitions:

Absorption Costing

An accounting method that includes both variable and fixed production costs in the cost of goods sold.

Total Gross Margin

A financial metric that measures the difference between revenue and the cost of goods sold, indicating the profitability of sales before deducting operating expenses.

Variable Costing

A method of inventory costing that includes only variable manufacturing costs - direct materials, direct labor, and variable manufacturing overhead - in the cost of a product.

Net Operating Income

Income from a company's operations, calculated by subtracting operating expenses from operating revenue, excluding income and expenses from non-operating activities.