Explain the Difference Between Estimating the Amount of Uncollectible Accounts

question 83

Essay

Explain the difference between estimating the amount of uncollectible accounts using the approaches based on percent of sales and accounts receivable.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, typically expressed on an annual basis.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, typically measured annually.

Profits

The financial gains obtained when revenue from business activities exceeds expenses, costs, and taxes.

Expected Rate Of Return

The predicted amount of return a given investment is anticipated to earn over a specified period.