The 2000 Accounts Receivable of ABC Company Have a Total

question 17

Multiple Choice

The 2000 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:

Unit Cost

The cost assigned to a single unit of product, calculated by dividing the total cost by the number of units produced.

Manufacturing

The process of converting raw materials or components into finished goods through the use of tools, human labor, and machinery.

Financial Accounting

The field of accounting that provides economic and financial information for investors, creditors, and other external users.

Raw Materials

Basic materials that are used in the production of goods, which have not yet been processed or manufactured.