The allowance method does not involve
A)estimating the amount of uncollectible accounts that will occur over time in connection with the sales of each period.
B)recognizing the amount of uncollectible accounts that will occur over time in connection with the sales of each period in the period of the sale.
C)matching expenses with associated revenues.
D)the valuation method required for income tax reporting in the United States.
E)none of the above.

Question

Quizplus · Accepted Answer

The allowance method is a method of accounting for bad debts that involves estimating the amount of uncollectible accounts that will occur over time in connection with the sales of each period and recognizing the amount in a separate allowance account. It is used to match expenses with associated revenues and is required for financial reporting purposes, but it is not a valuation method required for income tax reporting in the United States. Therefore, option D is the correct answer.

The Allowance Method Does Not Involve