An Evaluation of Franchising Would Conclude That This Type of Arrangement

question 55

Multiple Choice

An evaluation of franchising would conclude that this type of arrangement:

• A)Has become the dominant form of business organization in the United States because it has many advantages and almost no disadvantages.
• B)Appeals to people who want to own a business,but are not comfortable starting a company from scratch.
• C)Has a much higher risk of failure than independent companies.
• D)Has little chance of success outside the United States because many foreign countries do not allow such arrangements.

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Definitions:

Allowance Method

An accounting technique used to estimate and account for doubtful accounts, reducing accounts receivable to their net realizable value.

Direct Write-off Method

A method used in accounting to write off bad debt expenses when a company decides an account is uncollectible, directly affecting the income statement.

Bad Debts Recovered

Income received from previously written-off accounts receivable that were unexpectedly paid by the debtor.

Direct Write-off Method

An accounting approach where uncollectible accounts receivable are directly written off against income at the time they are deemed unrecoverable.