The Two Methods of Accounting for Uncollectible Receivables Are the Allowance

question 41

Multiple Choice

The two methods of accounting for uncollectible receivables are the allowance method and the:

• A)cost method.
• B)interest method.
• C)direct write-off method.
• D)equity method.

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Definitions:

Fixed Manufacturing Overhead

Regular, static expenses associated with operating a manufacturing facility, such as rent, utilities, and salaries, that do not vary with the level of production.

Direct Labor-hours

Direct labor-hours are the total hours worked by employees directly involved in the manufacturing process, used as a measure for allocating labor costs to products.

Predetermined Overhead Rate

The rate estimated at the beginning of a period to allocate overhead to products or job orders, calculated based on expected overhead costs and an allocation base.

Machine-hours

A measure of production activity that quantifies the total hours that machinery is in operation during a given period.