Fixed Costs Often Are Not Relevant in the Decision-Making Process

question 76

True/False

Fixed costs often are not relevant in the decision-making process as fixed costs do not vary in total within a relevant range of activity.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces total receivables to reflect the estimated uncollectible amounts.

Specific Customer

A particular or individual client to whom products or services are sold or provided.

Allowance Method

An accounting technique that estimates and deducts accounts receivable that may not be collectible, to more accurately represent a company's financial position.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, used in valuing inventory to reflect the net amount that can be realized.