Foothill Construction Uses the Allowance Method for Bad Debts

question 240

Multiple Choice

Foothill Construction uses the allowance method for bad debts.If management is overly pessimistic about its ability to collect customer accounts,the company will overstate Bad Debt Expense and:

• A)understate net income and days to collect will increase.
• B)understate net income but days to collect will decline.
• C)overstate net income and days to collect will increase.
• D)overstate net income and days to collect will decline.

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Definitions:

Relative Motion

The calculation of the motion of an object with respect to some other moving or stationary object.

Linear Perspective

A technique in visual art to create an illusion of depth on a flat surface, where parallel lines converge at a vanishing point.

Distance Cue

Visual indicators that allow a person to perceive depth or distance in their environment, such as texture gradient or aerial perspective.

Depth Perception

the visual ability to perceive the world in three dimensions, allowing for the estimation of distance.