An Allocation Base Is

question 113

Multiple Choice

An allocation base is:

• A) Normally related to cost changes in a traditional costing system
• B) A measure of activity that causes costs to fluctuate
• C) Seldom related to cost changes in an ABC system
• D) Often used incorrectly as a synonym for "cost driver"

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Definitions:

Uncollectible Notes

Loans or promissory notes that have been deemed uncollectible by the creditor due to the borrower's inability to pay.

Bad Debts Expense

Bad debts expense represents the estimated amount of accounts receivable that a company does not expect to collect due to customers' inability to fulfill payment obligations.

Notes Receivable

Financial assets representing the right to receive payments from a debtor for a specified amount by a certain date.

Receivables Turnover

A financial ratio indicating how quickly a company collects outstanding accounts receivable.