Under the Allowance Method of accounting for uncollectible accounts, a firm may base their estimate of uncollectible accounts on all of the following EXCEPT:
A)total accounts receivable at the end of the year
B)total current assets as of the end of the year
C)net credit sales for the year
D)aging of accounts receivable at the end of the year

Question

Quizplus · Accepted Answer

Total current assets as of the end of the year is not relevant to estimating uncollectible accounts. The other three options - total accounts receivable, net credit sales, and aging of accounts receivable - are commonly used factors in the allowance method of accounting for uncollectible accounts.

Under the Allowance Method of Accounting for Uncollectible Accounts, a Firm