The Cost of Producing an Additional Unit of a Good

question 232

Multiple Choice

The cost of producing an additional unit of a good or service that falls on people other than the producer is

• A) the marginal cost.
• B) represented by the demand curve.
• C) represented by the supply curve.
• D) the marginal external cost.
• E) the marginal social cost.

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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.