The Percentage of Sales Basis of Estimating Expected Uncollectibles

question 57

Multiple Choice

The percentage of sales basis of estimating expected uncollectibles

• A) emphasizes the matching of expenses with revenues.
• B) emphasizes balance sheet relationships.
• C) emphasizes cash realizable value.
• D) is not generally accepted as a basis for estimating bad debts.

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Definitions:

Standard Cost System

A standard cost system is a method of cost accounting that uses estimated costs for materials, labor, and overheads to compare against actual costs incurred, facilitating variance analysis and budgeting.

Actual Results

The real outcomes or data achieved at the end of a specified period, measured against planned or forecasted figures.

Labor Efficiency Variance

A measure used to determine how well labor resources are used, by comparing the standard labor hours supposed to be used to produce goods versus the actual hours used.

Standard Cost System

An accounting system that uses standard costs for cost control and decision-making purposes.