Two methods of estimating uncollectible receivables are ________.
A) the allowance method and the amortization method
B) the aging-of-accounts-receivable method and the percent-of-sales method
C) the gross-up method and the direct write-off method
D) the direct write-off method and the percent-of-completion method

Question

Quizplus · Accepted Answer

The two methods of estimating uncollectible receivables mentioned in option B (the aging-of-accounts-receivable method and the percent-of-sales method) are commonly used in accounting practice. The allowance method mentioned in option A involves estimating uncollectible receivables, but it is not the only method available. The amortization method is not directly related to estimating uncollectible receivables. The gross-up method mentioned in option C involves adjusting financial statements to reflect the full amount of a transaction, which is not directly related to estimating uncollectible receivables. The direct write-off method mentioned in options C and D involves writing off uncollectible receivables as they occur, rather than estimating them beforehand, and is generally not considered a best practice for financial reporting purposes. The percent-of-completion method mentioned in option D is used to recognize revenue and expenses on long-term projects and is not directly related to estimating uncollectible receivables.

Two Methods of Estimating Uncollectible Receivables Are ________