Explain How Monte Carlo Simulation Uses Random Numbers

question 23

Essay

Explain how Monte Carlo simulation uses random numbers.

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Definitions:

Bad Debts

Refers to the amount of money owed to a company that is unlikely to be paid by the debtor, considered as a loss to the company.

Direct Write-off Method

An accounting practice where uncollectable debts are directly removed from the accounts receivable balance upon determination of their uncollectibility.

Bad Debts

Funds that a business or individual is unable to collect because the debtor is unable to pay.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts receivable.