What Are the Two Different Methods for Accounting for Bad

question 4

Multiple Choice

What are the two different methods for accounting for bad debts:

• A)Direct Write-off method and Allowance method
• B)Accounts Receivable method and Direct Write-off method
• C)Accounts Receivable Reconciliation method and Allowance method
• D)Direct Write-off method and Accounts Receivable Reconciliation method

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced over a short period.

Operating Cash Flow

A measure of the amount of cash generated by a company's normal business operations, indicating whether a company can generate sufficient positive cash flow to maintain and grow its operations.

DOL

Degree of Operating Leverage, which measures a company's sensitivity of operational income to its sales levels, indicating the proportion of fixed versus variable costs.

Accounting Break-Even

The point at which total revenues equal total expenses, resulting in neither profit nor loss.