An Educated Speculation or a Possible Answer to a Question

question 27

Multiple Choice

An educated speculation or a possible answer to a question is called a(n) __________.

• A) scientific method
• B) theory
• C) law
• D) hypothesis
• E) fact

Analyze the impact of changes in estimates (useful life and salvage value) on depreciation expense.

Determine the book value and accumulated depreciation of an asset.

Understand the treatment and effects of disposal of plant assets, including gain or loss calculation.

Recognize the accounting treatment for changes in depreciation estimates and method changes.

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Definitions:

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Sales

The total revenue a company generates from selling goods, services, or both, within a specific period.

Average Collection Period

The average amount of time it takes for a company to receive payments owed by its customers for goods or services sold on credit.