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)Percentage 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 analyzing outstanding accounts to determine how long they have been past due. This allows for a more accurate estimation of bad debts expense, as older accounts are less likely to be collected. The other methods listed do not involve this level of detail and may not provide as accurate of an estimate.

A Method of Estimating Bad Debts Expense That Involves a Detailed