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Income Statement Approach
A method of calculating adjustments to income, focusing on items that affect the income statement directly.
Balance Sheet Approach
A method of evaluating or preparing financial statements focusing on the balances of assets, liabilities, and equity at a specific point in time.
Estimating Bad Debts
The process of forecasting the amount of credit sales that are not expected to be collected, to account for potential losses.
Allowance Method
A method of accounting for bad debts that involves estimating and setting aside an allowance for doubtful accounts.
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