Prime Costs Are

question 218

Multiple Choice

Prime costs are

• A) direct materials and factory overhead
• B) direct materials and direct labor
• C) direct labor and factory overhead
• D) period costs and factory overhead

---

Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables reported to reflect the amount that is expected to be uncollectible.

Bad Debt Expense

Bad debt expense is the cost associated with accounts receivable that a company cannot collect.

Allowance Method

An accounting technique to estimate and record bad debts expense, acknowledging that a certain percentage of accounts receivable may not be collectible.

Aging Receivables

A method of categorizing accounts receivable based on how long they have been outstanding to assess and manage credit risk.