The Method That Allocates Costs by Explicitly Including All the Services

question 11

Multiple Choice

The method that allocates costs by explicitly including all the services rendered among all support departments is the ________.

• A) direct method
• B) step-down method
• C) reciprocal method
• D) sequential method

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Definitions:

Credit Policies

Guidelines that set the criteria for extending credit to customers, including terms of payment and interest rates.

Aging Schedule

A table that shows the breakdown of accounts receivable into categories based on the length of time they have been outstanding.

Credit Policy

A credit policy is the set of guidelines that a company follows to determine the creditworthiness of customers and the terms of credit to offer.

Cash Balances

The amount of cash or cash equivalents that a company or an individual holds.