A Number of Costs and Measures of Activity Are Listed

question 9

Essay

A number of costs and measures of activity are listed below. Required:
For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it.

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Definitions:

Selling Receivables

The process of selling a company's outstanding invoices to a third party to improve cash flow and reduce risk.

Risk

The possibility of experiencing loss or other adverse effects in business or investment.

Allowance Method

An accounting technique to estimate and record bad debts by recognizing a provision for accounts receivable that might not be collected.

Bad Debt Expense

An expense recorded by businesses to reflect irrecoverable amounts owed by customers, considered an unavoidable cost of extending credit.