The Two Methods of Accounting for Uncollectible Accounts Receivable Are

question 178

Multiple Choice

The two methods of accounting for uncollectible accounts receivable are ________.

• A) the direct write-off method and the liability method
• B) the asset method and the sales method
• C) the allowance method and the liability method
• D) the allowance method and the direct write-off method

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Definitions:

Free Cash Flow

The amount of cash generated by a company after accounting for capital expenditures, necessary to maintain or expand the asset base.

WACC

The weighted average cost of capital, a measure of a firm's cost of capital in which each category of capital is proportionately weighted.

Firm Value

The total value of a company, measured by its market capitalization plus debts, minority interest, and preferred shares, minus total cash and cash equivalents.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk they undertake by investing in the stock.