A Method of Estimating Bad Debts Expense That Involves a Detailed

question 138

Multiple Choice

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:

• A)Direct write-off method.
• B)Aging of accounts receivable method.
• C)Percent of sales method.
• D)Aging of investments method.
• E)Percent of accounts receivable method.

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Definitions:

Direct Materials

Raw materials directly used in the production of goods, easily traceable to the product being manufactured.

Operating Income

The profit realized from a business's core operations after deducting operating expenses such as wages and cost of goods sold, but before taxes and interest.

Direct Labor

The cost of wages for those workers directly involved in the production of goods or services, not including support staff.

Overhead

General business expenses that are not directly attributable to a specific business activity, product, or service but are necessary for the business to operate.