A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see which customers the company will not collect from is known as the allowance method.

Question

Quizplus · Accepted Answer

This statement accurately defines the allowance method of accounting for uncollectible receivables. In this method, the company estimates a bad debts expense and records it as an adjusting entry at the end of each accounting period, based on historical data and current economic factors. This helps to match revenue with expenses and provides a more accurate picture of the company's financial position.

A Method of Accounting for Uncollectible Receivables in Which the Company