An Analyst Notes That ABC Inc

question 81

Multiple Choice

An analyst notes that ABC Inc.'s allowance for uncollectible accounts as a percentage of year-end accounts receivable has changed.Which of the following would be a plausible explanation for the change?

• A)ABC's management expects a default rate on outstanding receivables different than that which has occurred in prior years.
• B)ABC's management is using bad debt accruals to "manage" earnings.
• C)The company ages its receivables and the distribution of accounts receivable over the various age categories is different than in prior years.
• D)All of these are plausible reasons for the noted change.

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Definitions:

Cultural Knowledge

Understanding gained about the customs, beliefs, behaviors, and norms of a group or society, facilitating effective social interaction and integration.

Inferences

The process of reaching conclusions based on evidence and reasoning rather than direct observations.

Dispositions

Dispositions are inherent qualities of mind and character, reflecting tendencies to behave in certain ways under various conditions.

Interactions

The reciprocal action or influence between entities or individuals in psychological and social contexts.