Which one of the approaches for the allowance method of accounting for bad debts emphasizes the net realizable value of accounts receivable on the balance sheet?
A)The percentage of accounts receivable approach
B)The percentage of net credit sales approach
C)The direct write-off method
D)The uncollectible approach

Question

Quizplus · Accepted Answer

The percentage of accounts receivable approach calculates the net realizable value of accounts receivable by estimating the percentage of receivables that are expected to be uncollectible and then creating a corresponding allowance account on the balance sheet. This approach emphasizes the importance of showing a more accurate value for accounts receivable on the balance sheet, which is important for decision-making purposes.

Which One of the Approaches for the Allowance Method of Accounting