The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due, the lower the likelihood of collection.

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The aging method of determining bad debts expense is based on the principle that the longer a receivable is past due, the less likely it is to be collected. Therefore, the aging method uses different percentage rates to estimate the portion of the accounts receivable that is expected to be uncollectible based on the length of time the accounts have been outstanding.

The Aging Method of Determining Bad Debts Expense Is Based