Uncollectible Accounts Expense

question 112

Multiple Choice

Uncollectible accounts expense:

• A)Should not occur if the credit department properly investigates prospective customers who wish to purchase merchandise on credit.
• B)Is the amount of cash a business must pay each time a credit customer fails to pay his or her account.
• C)Is the amount a business must pay to a collection agency to recover amounts on overdue accounts receivable.
• D)Represents the loss in value of accounts receivable that are estimated to be uncollectible.

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Definitions:

Manufacturing Equipment

Tools and machinery used in the process of producing goods from raw materials.

Sprinkles

Small pieces of confectionery used as a decoration or to add texture to desserts.

Indirect Material

Materials used in the production process that cannot be directly linked to specific products, such as lubricants and cleaning supplies.

Prime Costs

The immediate expenses involved in producing a product, encompassing both the raw materials and the direct labor costs.