The Matching Principle, as Applied to Bad Debts, Requires

question 101

Multiple Choice

The matching principle, as applied to bad debts, requires:

• A)That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.
• B)The use of the direct write-off method for bad debts.
• C)The use of the allowance method of accounting for bad debts.
• D)That bad debts be disclosed in the financial statements.
• E)That bad debts not be written off.

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Definitions:

Variable Input

Any resource used in production whose quantity can be changed in the short term to increase or decrease output, such as labor or raw materials.

Marginal Cost

The expenditure incurred from creating one more unit of a product or service.

Total Variable Cost

The total of expenses that vary directly with the level of production or output.

Marginal Cost

The increment in expense for generating an additional unit of a product or service.