A company that uses the allowance method to account for uncollectible accounts:
A) records Uncollectible Accounts Expense when a receivable is written off.
B) does not record uncollectible accounts until the amount becomes significant.
C) reports the net realizable value of its accounts receivable on the balance sheet.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

A company that uses the allowance method estimates uncollectible accounts expense before they actually become uncollectible, using a contra-asset account known as allowance for doubtful accounts, and reports the net realizable value of accounts receivable on the balance sheet.

A Company That Uses the Allowance Method to Account for Uncollectible