If the "allowance for uncollectible accounts" balance is calculated using the percentage of sales method,
A)the auditor determines the year-end adjusting entry based on the amount needed to cover the estimated write-offs for the following year
B)the auditor determines the year-end adjusting entry based on the amount needed to cover the estimated write-offs for the current year
C)the client determines the year-end adjusting entry based on the amount needed to cover the estimated write-offs for the current year
D)the client determines the year-end adjusting entry based on the amount needed to cover the estimated write-offs for the following year

Question

Quizplus · Accepted Answer

The percentage of sales method focuses on estimating the allowance for uncollectible accounts based on sales for the period, typically aiming to cover estimated write-offs for the future period, hence the client (not the auditor) determines the year-end adjusting entry for the following year's estimated write-offs.

If the "Allowance for Uncollectible Accounts" Balance Is Calculated Using