The Profit Margin for Division C Is 6%, and the Investment

question 26

Multiple Choice

The profit margin for Division C is 6%, and the investment turnover is 1.2. The return on investment for Division B is

• A)20%
• B)6.7%
• C)7.3%
• D)7.2%

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Definitions:

Direct Write-off Method

A method of accounting for bad debts that charges the amount directly to expense when it is determined to be uncollectible.

Allowance Account

An accounting reserve set up to account for future adjustments such as bad debts or product returns.

Direct Write-off Method

An accounting method where uncollectible accounts receivable are directly written off against income at the time they are deemed non-collectable.

Allowance for Doubtful Accounts

An accounting provision representing the estimated portion of receivables that may not be collected.