Aging Accounts Receivable Refers to the Process of

question 84

Multiple Choice

Aging accounts receivable refers to the process of

• A) Determining their present value
• B) Determining their effect on sales
• C) Determining how many are still collectible and discounting them accordingly
• D) Determining future customer lists

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables reported to reflect the amount that is expected to be uncollectible.

Bad Debt Expense

Bad debt expense is the cost associated with accounts receivable that a company cannot collect.

Allowance Method

An accounting technique to estimate and record bad debts expense, acknowledging that a certain percentage of accounts receivable may not be collectible.

Aging Receivables

A method of categorizing accounts receivable based on how long they have been outstanding to assess and manage credit risk.