The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by generally accepted accounting principles.

Question

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The percent of each age group of an accounts receivable aging that is expected to become uncollectible is determined by the company's historical experience and management's judgment, not by generally accepted accounting principles (GAAP). GAAP provides the framework for reporting and disclosure, but companies must use their own historical data and analysis to estimate uncollectible amounts.

The Percent of Each Age Group of an Accounts Receivable