Explain the Benefits of a Good Budgeting Plan

question 37

Essay

Explain the benefits of a good budgeting plan.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated amount of accounts receivable which may not be collected.

Estimated Realizable Value

The anticipated amount of money that an asset is expected to bring upon sale or disposition, after accounting for costs of sale or disposal.

Accounts Receivable

Accounts receivable are amounts owed to a company by its customers for goods or services delivered on credit but not yet paid for.

Allowance Method

The allowance method is an accounting technique that estimates and accounts for bad debts, recognizing that a certain percentage of accounts receivable may not be collectible.