A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:
A)Direct write-off method.
B)Aging of accounts receivable method.
C)Percent of sales method.
D)Aging of investments method.
E)Percent of accounts receivable method.

Question

Quizplus · Accepted Answer

The aging of accounts receivable method involves examining outstanding accounts and categorizing them by their length of time past due. This allows for a more accurate estimation of bad debts expense based on the likelihood of non-collection. The other methods listed do not involve such detailed analysis of outstanding accounts.

A Method of Estimating Bad Debts Expense That Involves a Detailed