How Would Accountants Estimate the Amount of a Company's Uncollectible

question 70

Multiple Choice

How would accountants estimate the amount of a company's uncollectible accounts expense?

• A)Consider new circumstances that are anticipated to be experienced in the future.
• B)Compute as a percentage of revenue.
• C)Consider industry averages.
• D)All of these answer choices are correct.

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Definitions:

Variable Cost

Expenses that change in proportion to the level of production or sales activities of a company, such as raw materials and direct labor costs.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, typically represented by an area on a graph.

Supply Curve

A graph displaying the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to provide, holding all else equal.

Diminishing Marginal Product

A principle stating that as more of a variable input is added to a fixed input, the additional output produced from each additional unit of the variable input eventually decreases.