Match each description to the appropriate term (a-d). Each term may be used more than once.
-This method focuses on the income statement.
A)Direct write-off method
B)Aging of receivables method
C)Percent of sales method
D)Allowance method

Question

Quizplus · Accepted Answer

The percent of sales method is a method of estimating bad debts that is based on a percentage of the total sales for the period. It focuses on the income statement by estimating the bad debt expense for the period and recording it as an expense on the income statement. The other methods listed (direct write-off, aging of receivables, and allowance) also involve estimating bad debts, but they may focus more on the balance sheet or a combination of the income statement and balance sheet.

Match Each Description to the Appropriate Term (A-D)