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Suppose the input costs associated with manufacturing hair replacement treatments decrease over time. This would lead to:
Allowance Method
An accounting technique used to estimate and account for bad debts expense, building an allowance for doubtful accounts.
Bad Debts Expense
The cost associated with accounts receivable that a company cannot collect and thus writes off as a loss.
Allowance for Doubtful Accounts
A valuation account used to estimate the portion of a company's accounts receivable that may not be collectible.
Net Realizable Value
The estimated selling price in the ordinary course of business, minus any costs related to the sale or completion of goods.
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