Use the Table for the Question(s)below

question 81

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects with cash flows in $:
-The payback period for project B is closest to:

• A)2.5 years.
• B)2.0 years.
• C)2.2 years.
• D)2.4 years.

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Definitions:

Income Statement Approach

A method that estimates the amount of Bad Debts Expense that will result based on a percentage of net credit sales for the period. The amount of the expected bad debt is added to the existing balance of Allowance for Doubtful Accounts.

Gross Accounts Receivable

The total amount owed to a company by its customers for goods or services delivered, before deducting any allowance for doubtful accounts.

Contra-Asset Account

An asset account where its balance is a reduction of another asset account, typically used for accumulated depreciation.

Allowance for Doubtful Accounts

A contra-asset account reducing total accounts receivable to reflect the amount that is expected to be uncollectible.