Asked by Phyllisa Starks on May 26, 2024
Verified
This method is based on the theory that older accounts are less likely to be collected.
A) Direct write-off method
B) Aging of receivables method
C) Percent of sales method
D) Allowance method
Older Accounts
Refers to accounts receivable that have been outstanding for a longer period, often categorized by how long they have been unpaid (e.g., 30 days, 60 days).
Aging of Receivables Method
This is an accounting technique used to estimate uncollectible receivables by analyzing and classifying accounts receivable according to their age.
- Ascertain and engage techniques to calculate non-recoverable account estimates.
- Apprehend the progression and results of utilizing the aging method and direct write-off method for the ledger entry of bad debts.
Verified Answer
JB
Jenna BosserdetMay 31, 2024
Final Answer :
B
Explanation :
The description matches the aging of receivables method, which analyzes the age of each account and predicts the likelihood of it being collected based on how long it has been outstanding. The other methods (direct write-off, percent of sales, and allowance) do not take into account the age of the receivables as a primary factor in determining whether or not they will be collected.
Learning Objectives
- Ascertain and engage techniques to calculate non-recoverable account estimates.
- Apprehend the progression and results of utilizing the aging method and direct write-off method for the ledger entry of bad debts.
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