A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see from which customers the company will not be able to collect is known as the allowance method.

Question

Quizplus · Accepted Answer

The given statement is true. The allowance method involves estimating and recording an expense for uncollectible accounts, based on factors such as historical collection patterns and economic conditions. This creates a reserve or allowance account, which is used to offset any actual write-offs of uncollectible receivables.

A Method of Accounting for Uncollectible Receivables in Which the Company