Computing Bad Debt Expense by Estimating the Net Realizable Value

question 92

Multiple Choice

Computing bad debt expense by estimating the net realizable value of accounts receivable (ageing approach) :

• A) Emphasizes the income statement rather than the balance sheet.
• B) Causes an adjustment to the allowance account, which produces a balance in the account equal to the total estimated uncollectible amount.
• C) Produces a bad debt expense amount that is close to uncollectible current credit sales.
• D) Is based primarily on the cost principle.

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Definitions:

Inexpensive

Referring to a product, service, or item that has a low cost or price, making it affordable to a wide range of consumers.

Set-point Control

A control system method where a device adjusts its operation to maintain a process variable at a desired set-point or value.

Open Loop Control

A control system where the control action is independent of the output, lacking feedback from the process being controlled.

FLL Instruction

An instruction in PLC programming that fills a block of data with a specified value.