The two methods of accounting for uncollectible receivables are the:
A) direct method and the indirect method.
B) allowance method and the direct write-off method.
C) cash method and the accrual method.
D) percent of sales method and the analysis of receivables method.

Question

Quizplus · Accepted Answer

The two methods of accounting for uncollectible receivables are the allowance method and the direct write-off method. The allowance method involves estimating the amount of uncollectible receivables and creating an allowance account to reflect this estimate, while the direct write-off method involves writing off uncollectible receivables as they are identified. The allowance method is the preferred method as it conforms to the matching principle and provides a more accurate representation of accounts receivable on the balance sheet.

The Two Methods of Accounting for Uncollectible Receivables Are The