Estimating Uncollectible Accounts by Analyzing Individual Accounts Receivable According to the Length

question 112

Multiple Choice

Estimating uncollectible accounts by analyzing individual accounts receivable according to the length of time they have been outstanding is known as the:

• A)direct write-off method.
• B)percent-of-sales method.
• C)allowance method.
• D)aging-of-receivables method.

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Definitions:

Economic Downturn

A period of reduced economic activity characterized by declines in spending and investment, often leading to recession.

Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio to reduce exposure to any single asset or risk.

Diversifiable Risk

A type of risk that can be reduced or eliminated from a portfolio through investments in a variety of assets, also known as unsystematic risk.

Arbitrage Pricing Model

A theory for asset pricing that takes into account multiple risk factors and the return of an asset, assuming no arbitrage opportunities.