The percentage-of-credit-sales method for estimating uncollectible accounts is commonly referred to as the income statement method,because it always results in a higher amount of net income being reported in the income statement.

Question

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The percentage-of-credit-sales method does not result in a higher amount of net income being reported in the income statement. In fact, it can result in a lower amount of net income due to the estimated amount of uncollectible accounts being deducted as an expense.

The Percentage-Of-Credit-Sales Method for Estimating Uncollectible Accounts Is Commonly Referred