The percent-of-sales method of computing uncollectible accounts for Accounts Receivable is used by some companies because:
A)it ensures that Accounts Receivable are reported at net realizable value.
B)it is more accurate than the aging method.
C)it is easier and quicker to apply.
D)it fine tunes their allowance for uncollectibles.

Question

Quizplus · Accepted Answer

The percent-of-sales method is simpler and quicker to apply because it uses a fixed percentage of total sales to estimate uncollectible accounts, rather than analyzing individual accounts.

The Percent-Of-Sales Method of Computing Uncollectible Accounts for Accounts Receivable