In a Mixed-Cost Linear Function with One Cost Driver,the Intercept

question 117

Multiple Choice

In a mixed-cost linear function with one cost driver,the intercept is the ________ and the slope is the ________.

• A) fixed cost; step cost
• B) fixed cost; variable cost
• C) variable cost; fixed cost
• D) variable cost; step cost

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Definitions:

Allowance Method

An accounting technique used to estimate and account for potential uncollectible accounts receivable and bad debts.

Uncollectible Receivables

Debts owed to a company that are deemed unrecoverable and are written off as a loss because the debtor is unable to pay.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, which is used as a contra asset to adjust the net value of accounts receivable.

Direct Write-off Method

An accounting approach where uncollectable debts are directly written off against income at the time they are deemed non-recoverable.