The allowance method based on the idea that a given percent of a company's credit sales for the period is 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 the idea that a given percent of a company's credit sales for the period is uncollectible is the percent of sales method. It is called the percent of sales method because the company estimates the amount of uncollectible accounts based on a percentage of its credit sales for the period. This method is simple to use and is widely applied in practice.

The Allowance Method Based on the Idea That a Given