question archive Advise a new accounting student which method of estimating the uncollectible accounts expense requires the preparation of aging of accounts receivable? a)We are never required to prepare aging of accounts receivable
Advise a new accounting student which method of estimating the uncollectible accounts expense requires the preparation of aging of accounts receivable? a)We are never required to prepare aging of accounts receivable
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Advise a new accounting student which method of estimating the uncollectible accounts expense requires the preparation of aging of accounts receivable?
a)We are never required to prepare aging of accounts receivable.
b) The direct write-off method
c)The percentage-of-receivables method
d) The cash approach
e) The percentage-of-credit sales method
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c. percentage-of-receivables method
Step-by-step explanation
aging of accounts receivable is another way of estimating uncollectible expense which purely based on the receivables. The management arranges the age of the receivables normally 0-30 days, 31-60 days, 61-90 days and over 90 days. From these age of receivables, they will assign the percentage of uncollectible. The older the age of receivables the higher the risk of uncollectible so a higher percentage is assigned.
