Exhibit 18

question 12

Multiple Choice

Exhibit 18.2.The following table includes the information about a monthly time series. Refer to Exhibit 18.2.When the exponential smoothing method with α = 0.1 and α = 0.5 is applied,what is the speed of decline for which the mean square error (MSE) is better? What is this mean?

• A)α = 0.5 and MSE = 13.67
• B)α = 0.1 and MSE = 13.67
• C)α = 0.5 and MSE = 10.41
• D)α = 0.1 and MSE = 10.41

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Definitions:

Bad Debt Expense

Bad debt expense is the cost associated with accounts receivable that a company cannot collect.

Allowance Method

An accounting technique to estimate and record bad debts expense, acknowledging that a certain percentage of accounts receivable may not be collectible.

Aging Receivables

A method of categorizing accounts receivable based on how long they have been outstanding to assess and manage credit risk.

Bad Debt Expense

Represents the portion of receivables that a company estimates it will not be able to collect.