In estimating the amount of uncollectible accounts the accountant (1) estimates the amount of outstanding accounts receivable that the firm does not expect to collect and (2) adjusts the balance in the Allowance for Uncollectible Accounts so that, after the entry to recognize estimated uncollectibles, the balance in the account will equal the amount that the firm does not expect to collect.The name of this procedure is/are:
A)the percentage-of-sales.
B)aging-of-accounts-receivable.
C)direct write-off.
D)tax accounting.
E)indirect write-off.

Question

Quizplus · Accepted Answer

The procedure described in the statement is known as the aging-of-accounts-receivable method, which involves estimating the amount of uncollectible accounts by analyzing the composition and age of the accounts receivable. This method considers the fact that older accounts are less likely to be collected and therefore assigns a higher percentage to them. Additionally, the method involves adjusting the balance in the Allowance for Uncollectible Accounts to ensure that it reflects the estimated amount of uncollectibles. The other options listed (percentage-of-sales, direct write-off, tax accounting, and indirect write-off) do not involve a detailed analysis of the accounts receivable and the estimated collectibility of individual accounts.

In Estimating the Amount of Uncollectible Accounts the Accountant (1)