The Direct Write-Off Method of Accounting for Uncollectible Accounts

question 184

Multiple Choice

The direct write-off method of accounting for uncollectible accounts

• A) emphasizes balance sheet relationships
• B) is often used by small companies and companies with few receivables
• C) emphasizes cash realizable value
• D) emphasizes the matching of expenses with revenues

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Definitions:

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Net Loss

A financial situation that occurs when a company's total expenses exceed its revenues, indicating a negative profit.

Variable Costs

Costs that change in proportion to the level of activity or volume, such as raw materials and direct labor.

Selling Price

The amount of money a buyer pays to purchase a product or service, determined by factors such as cost, market demand, and competitiveness.