Uncollectible Accounts Expense

question 112

Multiple Choice

Uncollectible accounts expense:

• A)Should not occur if the credit department properly investigates prospective customers who wish to purchase merchandise on credit.
• B)Is the amount of cash a business must pay each time a credit customer fails to pay his or her account.
• C)Is the amount a business must pay to a collection agency to recover amounts on overdue accounts receivable.
• D)Represents the loss in value of accounts receivable that are estimated to be uncollectible.

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Definitions:

Marginal Products

The additional output that results from the use of an additional unit of a productive input, holding other inputs constant.

Pooling Equilibrium

A situation in a signaling game where different types cannot be distinguished by the actions they take, leading everyone to pool together and behave identically.

Low-productivity Workers

Employees who generate less output per unit of input compared to others, often leading to less efficiency within an organization.

Moral Hazard

The situation where one party is more likely to take risks because another party bears the cost of those risks.