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When the Estimate of the Losses from Uncollectible Accounts Is

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When the estimate of the losses from uncollectible accounts is based on the aging method, the primary concern is proper valuation of the accounts receivable on the balance sheet.


Definitions:

Operating Expenses

Costs incurred in the normal operation of a business, excluding the cost of goods sold.

Direct Expenses

Expenses that can be traced directly to a specific department.

Specific Department

A designated segment within an organization focused on a particular area of activity or operations.

Profit Center

A business unit or department which is treated as a separate entity for the purpose of calculating its profitability.

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