Stratification of Accounts Receivable Is Desirable When Using Confirmations

question 71

True/False

Stratification of accounts receivable is desirable when using confirmations.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's receivables that may not be collected.

Bad Debt Expense

A ledger showing the value of invoices that a business anticipates it will not be able to receive payment for.

Aging of Receivables

A method for managing accounts receivable by categorizing debts by their due ages to estimate the timing of collections.

Allowance for Doubtful Accounts

An estimation of the accounts receivable that a company does not expect to collect, serving as a contra account to accounts receivable.