The analysis of receivables method of costing inventory is based on the assumption that:
A) the uncollectible accounts can be estimated as a percentage of credit sales.
B) the bad debt expense is recorded by estimating uncollectible accounts at the end of the accounting period.
C) the bad debt expense is recorded only when an account is determined to be worthless.
D) the longer an account receivable is outstanding, the less likely that it will be collected.

Question

Quizplus · Accepted Answer

The analysis of receivables method assumes that the likelihood of collecting an account decreases as the account remains outstanding for a longer period.

The Analysis of Receivables Method of Costing Inventory Is Based