Question

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) Adjustment method for uncollectible debts.B) Allowance method of accounting for bad debt.C) Cash basis method of accounting for bad debts.D) Aging of notes receivable.E) Direct write-off method of accounting for bad debts.

Answer 1

Allowance method of accounting for bad debts .

Option - B

Explanation:

The financial accounting term payments method refers to a system that is unplayable and records a bad debt expenditure estimate in the same period of accounting as the purchase. The deduction is used to adjust the cash flow accounts receivable.

The payment method is a better solution to the direct payment method because it is in line with the matching accounting theory.

Bad debts expenses are recognized soon since bad debts are likely and can be estimated to a fairly precise degree so that they meet the criteria necessary to recognize predicated losses and recognize the costs of bad debts.