Use of an Allowance for Doubtful Accounts Is an Application

question 72

Multiple Choice

Use of an allowance for doubtful accounts is an application of the

• A) matching principle.
• B) revenue recognition principle.
• C) historical cost principle.
• D) full disclosure principle.

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Definitions:

Total Product

The overall quantity of output produced by a firm from a given quantity of inputs.

Short Run

In microeconomics, a period of time in which producers are able to change the quantities of some but not all of the resources they employ; a period in which some resources (usually plant) are fixed and some are variable.

Profits

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Long Run

In microeconomics, a period of time long enough to enable producers of a product to change the quantities of all the resources they employ, so that all resources and costs are variable and no resources or costs are fixed.