This Year Ace Electronics Tried Calculating Its Bad Debts Expense

question 106

Multiple Choice

This year Ace Electronics tried calculating its bad debts expense two different ways.Using a percentage of credit sales,bad debts expense would be $1,500.Based on an aging of accounts receivable,however,bad debts expense would be only $1,200.If Ace decides to report $1,500 of bad debts expense,this accounting choice would be considered ________.

• A)conservative
• B)fundamental
• C)basic
• D)aggressive

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Definitions:

Earnings Per Share

A key financial indicator calculated by dividing the net income by the number of outstanding shares of a company's stock.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.

Infrequent Gain/Loss

Earnings or losses that arise from events that are not expected to recur regularly, distinguished from ordinary operational results.

Continuing Operations

The segments of a business expected to continue operating into the foreseeable future, excluding any discontinued operations.