Which method for estimating bad debts is generally considered to be the most accurate?
A)Percentage of credit sales
B)Allowance method
C)Specific account method
D)Aging of accounts receivable method

Question

Quizplus · Accepted Answer

The allowance method is the general idea of estimating uncollectible accounts,using either the percentage of credit sales method or the aging of accounts receivable method.Of these two estimation methods,the aging of accounts receivable method is generally considered to be more accurate than the percentage of credit sales method.The aging of accounts receivable method takes into consideration that,generally,the longer a receivable goes unpaid the less likely it is to be paid.

Which Method for Estimating Bad Debts Is Generally Considered to Be