An applicable financial reporting framework allows the audit client to calculate the balance in the allowance for uncollectible accounts by
A)the percentage of accounts receivable method
B)the percentage of cash sales method
C)the percentage of sales method
D)the aging of accounts receivable method
E)the aging of cash sales method
F)both A and E
G)both C and D

Question

Quizplus · Accepted Answer

The percentage of sales method and the aging of accounts receivable method are both commonly accepted ways to calculate the allowance for uncollectible accounts under applicable financial reporting frameworks. The percentage of sales method estimates bad debts based on historical sales data, while the aging method categorizes receivables by their age to estimate their collectibility.

An Applicable Financial Reporting Framework Allows the Audit Client to Calculate