For Consumers, Chocolate Chip Cookies and Doughnuts Are Substitutes

question 254

True/False

For consumers, chocolate chip cookies and doughnuts are substitutes. So, an increase in the price of chocolate chip cookies will lead to a rightward shift in the demand curve for doughnuts.

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Definitions:

Accounts Receivable

Liabilities of customers to a business entity for services or products provided but still awaiting payment.

Bad Debts Expense

An estimated expense that represents accounts receivable that a company does not expect to collect.

Normal Balance

Normal balance refers to the side of the accounting equation on which increases to an account are recorded, which is debits for asset and expense accounts, and credits for liability, equity, and revenue accounts.

Allowance for Doubtful Accounts

An account that offsets assets, designed to predict the amount of a company’s accounts receivable that is likely to be uncollectible.