Asked by Stephan Polit on Jul 03, 2024
Verified
When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when
A) a sale is made.
B) an account becomes uncollectible and is written off.
C) management estimates the amount of uncollectible accounts.
D) a customer's account becomes past due.
Allowance Method
An accounting technique used to estimate and account for bad debts by establishing an allowance for doubtful accounts.
Bad Debts Expense
An expense reported on the income statement, accounting for the estimated amount of accounts receivable that are not expected to be collected.
- Understand the application of the allowance method for bad debts and its effects on financial reports.
Verified Answer
KN
KEERTHIGA N M 19MBR052Jul 04, 2024
Final Answer :
C
Explanation :
The allowance method involves estimating uncollectible accounts at the end of each period and recording Bad Debts Expense based on this estimation, not when a specific account is identified as uncollectible or at the time of sale.
Learning Objectives
- Understand the application of the allowance method for bad debts and its effects on financial reports.
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