The 2,000 Accounts Receivable of ABC Company Have a Total

question 31

Multiple Choice

The 2,000 accounts receivable of ABC Company have a total book value of $40,000.Bob Rotter,CPA,has selected and audited a sample of 100 accounts with a total book value of $1,950.The audited value of the 100 accounts in the sample is $1,875.
-Using the ratio estimation technique,Rotter's estimate (to the nearest dollar) of year-end accounts receivable balance would be:

• A)$37,500
• B)$38,462
• C)$38,500
• D)$41,600

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Definitions:

Variable Costs

Costs of production that vary with the level of output, such as raw materials and labor expenses.

Temporarily

For a limited period of time; not permanent.

Short-Run Profits

Earnings that a company makes over a short period of time, not taking into consideration the full costs of production in the long term.

Profit-Maximizing

A strategy or process by which a business aims to achieve the highest possible profits from its operations.