Which of the following are the two methods of estimating uncollectible receivables?
A) The allowance method and the amortization method
B) The aging-of-accounts-receivable method and the percent-of-sales method
C) The gross-up method and the direct write-off method
D) The direct write-off method and the percent-of-completion method

Question

Quizplus · Accepted Answer

The two methods of estimating uncollectible receivables are the aging-of-accounts-receivable method and the percent-of-sales method. The aging method estimates uncollectible receivables based on the length of time the account has been outstanding while the percent-of-sales method estimates uncollectible receivables as a percentage of total credit sales. The allowance method is a specific application of the aging method to adjust the balance of accounts receivable to its net realizable value. The amortization method is not a method of estimating uncollectible receivables; it is a method of allocating the cost of intangible assets over their useful life. Both the gross-up method and the percent-of-completion method are not methods of estimating uncollectible receivables.

Which of the Following Are the Two Methods of Estimating