The existing balance in Allowance for Doubtful Accounts at the end of the year is not considered when the estimate of uncollectible accounts is based on
A)a percent of total accounts receivable outstanding.
B)a percent of net income.
C)an aging of accounts receivable.
D)a percent of net credit sales.

Question

Quizplus · Accepted Answer

Estimating uncollectible accounts based on a percent of net credit sales does not consider the existing balance in Allowance for Doubtful Accounts. The other methods listed (A, B, and C) typically take the existing balance into consideration when calculating the new estimate.

The Existing Balance in Allowance for Doubtful Accounts at the End