Niagara Art Is a New Business

question 167

Multiple Choice

Niagara Art is a new business.During its first year of operations,credit sales were $44,000 and collections of credit sales were $33,000.One account,$625,was written off.Management uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be uncollectible.Bad debts expense for the first year of operations is ________.

• A)$255
• B)$880
• C)$625
• D)$1,540

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Definitions:

Telepathy

The supposed communication of thoughts or ideas by means other than the known senses.

Signal-Detection Theory

A psychological theory that explains how individuals distinguish between informative signals and noise in the environment under conditions of uncertainty.

Trichromatic Theory

A theory of color vision that proposes three types of color receptor cells in the eye, each sensitive to red, blue, or green.

Opponent-Process Theory

A psychological and neurological model that explains how the perception of colors is controlled by the operation of opposing neural systems.