When the allowance method of recognizing losses from uncollectible accounts is used,the net value of accounts receivable on the balance sheet will more nearly reflect the amount that will ultimately be collected.

Question

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The allowance method is designed to estimate and recognize the amount of uncollectible accounts, which is deducted from the total accounts receivable on the balance sheet. Therefore, the net value of accounts receivable will reflect a more accurate representation of the amount that is expected to be collected.

When the Allowance Method of Recognizing Losses from Uncollectible Accounts