The Use of the Allowance Method of Accounting for Bad

question 62

Multiple Choice

The use of the allowance method of accounting for bad debts is preferred over the direct write-off method because of the:

• A)matching principle.
• B)historical cost principle.
• C)revenue recognition principle.
• D)full disclosure principle.

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Definitions:

Type II Error

A statistical error made by failing to reject a false null hypothesis (a false negative).

Standard Deviation

A measure of the dispersion or variation in a distribution, indicating how much the individual data points deviate from the mean.

Sample Size

Sample size refers to the number of observations or data points collected in a statistical study, which is critical for ensuring the reliability, validity, and generalizability of the study's results.

Probability of Error

Probability of error refers to the likelihood that a statistical decision or hypothesis test will result in a wrong conclusion.