A Company Reports Accounts Receivable on the Balance Sheet at a Net

question 121

Multiple Choice

A company reports accounts receivable on the balance sheet at a net realizable value of $586,592. If their gross receivables were $612,854, then the balance in the Allowance for Uncollectible Accounts is:

• A) $26,262.
• B) $38,745.
• C) $73,812.
• D) cannot be determined from the facts.

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Definitions:

Free-rider Problem

A situation in which some individuals benefit from resources or services without paying for them, leading to underprovision of those goods or services.

Marginal Private Benefit

The additional benefit received by the consumer or producer from consuming or producing one more unit of a good or service.

Marginal Social Cost

The additional cost imposed on society as a whole from producing one more unit of a good or service.

Socially Optimal

is a condition or outcome in which the allocation of resources maximizes the overall benefit to society.