A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and the length of time past due is the:
A)Direct write-off method.
B)Aging of accounts receivable method.
C)Percentage of sales method.
D)Aging of investments method.
E)Percent of accounts receivable method.

Question

Quizplus · Accepted Answer

The Aging of Accounts Receivable Method involves a detailed examination of outstanding accounts and the length of time past due. This method is considered more accurate than the Percentage of Sales Method or the Direct Write-Off Method because it takes into account the specific timeframe of when the debt is expected to be collected. The Aging of Investments Method and Percent of Accounts Receivable Method are not relevant in this case.

A Method of Estimating Bad Debts Expense That Involves a Detailed