In a Decision to Drop a Segment, the Opportunity Cost

question 51

True/False

In a decision to drop a segment, the opportunity cost of the space occupied by the segment is the cost of renting or building similar space nearby.

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Definitions:

Bad Debts Expense

The amount of receivables that a company does not expect to collect and thus writes off as a loss in its accounting records.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a specific period.

Comparative Balance Sheets

Financial statements that present the financial position of a company at different points in time, side by side, to facilitate comparison.

Allowance Method

An accounting technique used to estimate and record bad debts expense by anticipating uncollectible accounts.