Which of the Following Is Not Considered a Capital Investment

question 35

Multiple Choice

Which of the following is not considered a capital investment?

• A)The purchase of a large machine.
• B)The development of a new product line.
• C)The purchase of a large order of raw materials used in the production process.
• D)The acquisition of a subsidiary company.

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Definitions:

Allowance for Doubtful Accounts

A contra account that estimates the portion of accounts receivable which may not be collectible.

Uncollectible Accounts

Refers to debts owed to a company that it does not expect to be paid due to various reasons such as bankruptcy of the debtor.

Bad Debt Expense

An expense account that represents amounts deemed uncollectible from credit sales and highlights credit losses in financial statements.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts is a contra-asset account that reflects the estimated amount of accounts receivable which may not be collectible.