The Percent-Of-Sales Method of Computing Uncollectible Accounts Is Used For

question 42

Multiple Choice

The percent-of-sales method of computing uncollectible accounts is used for:

• A) interim statements because it is more accurate than the aging method.
• B) annual statements because it is more accurate than the aging method.
• C) interim statements because it is easier than the aging method.
• D) annual statements because it is easier than the aging method.

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Definitions:

Departmental Overhead Rates

Specific overhead rates calculated for different departments within a company to more accurately assign costs.

Activity-based Costing

A costing method that assigns overhead costs to products based on the activities that consume resources in producing the product.

Product-level Activities

Operations or tasks that are performed specifically in support of producing a particular product, often influencing the cost associated with that product.

Departmental Overhead Rates

Rates used to allocate indirect costs to specific departments, based on departmental activities, to accurately assess their expenses.