Two bases for estimating uncollectible accounts are:
A) percentage of assets and percentage of sales.
B) percentage of receivables and percentage of total revenue.
C) percentage of current assets and percentage of sales.
D) percentage of receivables and percentage of sales.

Question

Quizplus · Accepted Answer

The most commonly used bases for estimating uncollectible accounts are percentage of receivables and percentage of sales. Percentage of receivables is calculated by estimating the percentage of accounts that will likely be uncollectible based on past experience and the current economic situation. Percentage of sales is calculated by estimating the percentage of sales that will likely result in bad debt based on past experience and the current economic situation. Combining these two methods provides a more accurate estimation of uncollectible accounts.

Two Bases for Estimating Uncollectible Accounts Are