Question

The ______________ of estimating bad debts expense involves a detailed listing of each customer's outstanding account and its length of time past due i Multiple Choice Direct write-off method. Percentage of sales method.

Answer 1

Answer:

Aging of accounts receivable method.

Explanation:

Accounts receivable are the payments owed to a business by its customers. Bad debt occurs when there is uncertainty that an account receivable will be recovered.

The accounts receivable aging method is used to classify debts based on on the length of time past due.

Classifications such as are based on length of time past due and when to time past due is too long it will be considered to be a loss.

Lengths of time used include: 1-30 days past due, 31-60 days past due, 61-90 days past due, 91-120 days past due, and greater than 120 days past due.