Which of the following is an accounting procedure that (1)estimates and reports bad debts expense from credit sales during the period the sales are recorded,and (2)reports accounts receivable at the estimated amount of cash to be collected?
A)Allowance method of accounting for bad debts.
B)Aging of notes receivable.
C)Adjustment method for uncollectible debts.
D)Direct write-off method of accounting for bad debts.
E)Cash basis method of accounting for bad debts.

Question

Quizplus · Accepted Answer

The allowance method of accounting for bad debts fulfills both (1) and (2) as described in the question. It estimates and reports bad debt expense based on the credit sales made during the period, and it reports the accounts receivable at their estimated amount of cash to be collected. The aging of notes receivable is a procedure to estimate the collectibility of specific notes, while the adjustment method for uncollectible debts and the direct write-off method are alternatives to the allowance method for reporting bad debt expense. The cash basis method of accounting for bad debts is not a widely acceptable method under GAAP.

Which of the Following Is an Accounting Procedure That (1)estimates