Which of the following are the two methods of accounting for uncollectable receivables?
A)The allowance method and the liability method
B)The allowance method and the direct write-off method
C)The direct write-off method and the liability method
D)The asset method and the sales method

Question

Quizplus · Accepted Answer

The two methods of accounting for uncollectable receivables are the allowance method and the direct write-off method. The allowance method involves estimating the amount of uncollectable accounts and setting up an allowance account that reduces the accounts receivable balance. The direct write-off method involves writing off the uncollectable accounts directly as soon as it is determined to be uncollectable. The other answer choices do not accurately describe the methods of accounting for uncollectable receivables.

Which of the Following Are the Two Methods of Accounting