The allowance method based on the idea that a given percent of a company's credit sales for the period are uncollectible is:
A)The percent of sales method.
B)The percent of accounts receivable method.
C)The aging of accounts receivable method.
D)Direct write-off method.
E)Factoring method.

Question

Quizplus · Accepted Answer

The allowance method based on a given percent of credit sales for the period being uncollectible is known as the percent of sales method. This method estimates bad debts based on the percentage of credit sales, which helps to determine the amount of the allowance for doubtful accounts.

The Allowance Method Based on the Idea That a Given