Use the Following to Answer Questions

question 372

Multiple Choice

Use the following to answer questions:
Figure: Harold's Indifference Curves
The figure shows three of Harold's indifference curves for bread and cheese.
-(Figure: Harold's Indifference Curves) Look at the figure Harold's Indifference Curves. If the price of bread is $1 per loaf, the price of cheese is $2 per pound, and Harold has $10 to spend on bread and cheese, Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.

• A) 6; 4
• B) 4; 3
• C) 3; 2
• D) 2; 8

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Definitions:

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and thus writes off as a loss.

Direct Write-off Method

An accounting practice where uncollectable debts are written off against income at the time they are deemed non-collectable.

Allowance Method

An accounting technique that estimates uncollectible accounts receivable to record bad debts expense, reflecting more accurate accounts.

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated amount of accounts receivable which may not be collected.