One of the shortcomings in evaluating the allowance for uncollectible accounts by reviewing individual noncurrent balances on the aged trial balance is: I. it is difficult to compare the results of the current year with those of the previous year.
II) current accounts are ignored in establishing the adequacy of the allowance.
A)I only
B)II only
C)both I and II
D)neither I or II

Question

Quizplus · Accepted Answer

I is correct because reviewing individual noncurrent balances on the aged trial balance does not allow for a direct comparison between the current year's uncollectible accounts and those of the previous year. II is also correct because current accounts are not included in the noncurrent balance, so their adequacy is not considered. Therefore, both I and II are shortcomings in evaluating the allowance for uncollectible accounts.

One of the Shortcomings in Evaluating the Allowance for Uncollectible