Which Statement About Using the Aging of Accounts Receivable to Estimate

question 117

Multiple Choice

Which statement about using the aging of accounts receivable to estimate bad debt expense is correct?

• A)This method has the same results as estimating the bad debt expense by using the percentage of credit sales.
• B)This method records an adjustment to the allowance account irrespective of the balance in that account, immediately prior to the adjustment.
• C)This method focuses on the income statement.
• D)This method focuses on the balance sheet.

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Definitions:

Departments

Distinct units within an organization, each focusing on a specific area of the business or a particular line of products or services.

Calculate

To determine or ascertain by mathematical methods; compute.

Direct Expense

Costs that can be directly attributed to a specific product, service, or department within a business.

Indirect Expense

Costs that are not directly attributable to a specific product or service, such as utilities or administrative salaries.