Fixed Cost Refers To

question 86

Multiple Choice

Fixed cost refers to:

• A)the sum of the expenses that vary directly with the quantity of the product produced and sold.
• B)the total expense incurred by a firm in producing and marketing a product or service.
• C)expenses that are stable and do not change with the quantity of the product that is produced and sold.
• D)the consideration exchanged for the ownership or use of a good or service.

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Definitions:

Allowance for Doubtful Accounts

This is a contra-asset account used to estimate the portion of accounts receivable that may not be collectible.

Accounts Receivable

Funds that customers owe a company for goods or services already provided but not yet compensated for.

Allowance Method

An accounting technique used to estimate and account for a firm's potentially uncollectible accounts receivable.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collectible.