To Allow for Debts That Might Prove Bad in the Future

question 13

Multiple Choice

To allow for debts that might prove bad in the future, a business will recognise as an expense in the income statement:

• A)bad debts.
• B)doubtful debts.
• C)allowance for doubtful debts.
• D)allowance for depreciation.

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Definitions:

Government Subsidy

A financial contribution provided by the government to individuals, businesses, or other organizations, aimed to support or stimulate economic activity.

Superstars Pay

Refers to the significantly high salaries or earnings of top performers or individuals in specific industries such as sports, entertainment, and business due to their exceptional skill, talent, or marketability.

Marginal Revenue Productivity

The additional revenue generated by employing one more unit of a given resource or factor of production.

Elastic Product Demand

A situation where the demand for a product is sensitive to changes in price, meaning small price changes can cause large changes in quantity demanded.