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The direction of the pressure gradient on this figure is labeled:
Allowance Method
An accounting technique used to estimate and account for bad debts, allowing companies to anticipate uncollectible accounts receivables.
Bad Debts Expense
An expense account reflecting the value of sales that were made on credit and are unlikely to be collected.
Income Statement Approach
A method to estimate bad debts expense by focusing on the income statement and adjusting the allowance for doubtful accounts to reach a desired net realizable value.
Bad Debts Expense
The cost associated with the estimated amount of receivables that a company is unable to collect from its customers.
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