Select the Appropriate Classification of Each of the Costs Listed

question 26

Multiple Choice

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Cost of rework, with respect to number of items reworked

• A)Variable cost
• B)Fixed cost

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Definitions:

Bad Debts Expense

An expense reported on the income statement, representing the amount of receivables that a company does not expect to collect due to customer default.

Adjusting Entries

Entries recorded in the journals at the close of an accounting period to assign income and costs to the period they truly relate to.

Allowance Method

A method of accounting for bad debts that involves estimating and setting aside a specific amount to cover potential credit losses.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and are therefore written off as a loss by a business.