Your Company Previously Averaged About 20% of Its Total Accounts

question 122

Multiple Choice

Your company previously averaged about 20% of its total accounts receivable in the "over 90 days past due" category and now has 35% in this category.All else equal,using the aging of accounts receivable method,the amount of the bad debt adjustment will:

• A)fall,increasing the ending balance of the allowance account.
• B)rise,increasing the ending balance of the allowance account.
• C)fall,decreasing the ending balance of the allowance account.
• D)rise,decreasing the ending balance of the allowance account.

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Definitions:

Heuristic

A shortcut (rule of thumb or informal guideline) used to reduce the amount of thinking that is needed to make decisions.

Informal Reasoning

The process of thinking about issues in a non-formal or structured manner, often used in everyday problem-solving and decision-making.

Schemas

Cognitive frameworks or concepts that help individuals organize and interpret information from the world around them, influencing learning and perception.

Stereotypes

Oversimplified generalizations about a group of people, often based on incorrect or incomplete information, leading to prejudiced attitudes.