The Percent-Of-Sales Method for Computing Uncollectible Accounts

question 21

Multiple Choice

The percent-of-sales method for computing uncollectible accounts:

• A)computes Uncollectible-Account Expense as a percent of accounts receivable.
• B)takes a balance sheet approach.
• C)employs the expense recognition (matching)concept.
• D)will result in the same amount of estimated Uncollectible-Accounts Expense as the aging-of-receivables method.

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Definitions:

Normal Distribution

A bell-shaped distribution that is symmetric about the mean, describing how values of a variable are spread or dispersed.

Mean

The arithmetic average of a set of numbers, calculated by adding them together and dividing by the count of numbers.

Standard Deviation

It quantifies the spread of a dataset, illustrating how much individual data points diverge from the mean value.

Z-score

A measure of how many standard deviations an element is from the mean; used in statistics for standardizing scores.