There are two approaches that management can use to estimate the amount of credit sales that would prove to be uncollectible, they are the _____. Over time, the two methods, correctly used, will give the same cumulative income and asset totals.U.S.GAAP and IFRS do not require firms to use one or the other, and some firms use both methods.
A)gross amount of sales procedure and the aging-of-accounts-receivable procedure.
B)percentage-of-sales procedure and the aging-of-accounts-receivable procedure.
C)percentage-of-cost of good sold procedure and the amount of accounts-receivable procedure.
D)percentage-of-cost of good sold procedure and the aging-of-notes-receivable procedure.
E)gross amount of sales procedure and the amount of accounts-receivable procedure.

Question

Quizplus · Accepted Answer

The two approaches management can use are the percentage-of-sales procedure and the aging-of-accounts-receivable procedure. The percentage-of-sales procedure estimates uncollectible accounts by applying a percentage to credit sales. The aging-of-accounts-receivable procedure estimates uncollectible accounts based on the age of the accounts receivable. Both methods are acceptable and will ultimately lead to the same cumulative income and asset totals.

There Are Two Approaches That Management Can Use to Estimate