Under the Percentage-Of-Sales Method, the Estimate of Bad Debts for the Period

question 84

Multiple Choice

Under the percentage-of-sales method, the estimate of bad debts for the period is based on:

• A)the ending balance in the Accounts Receivable account.
• B)the aging accounts receivable schedule.
• C)a percentage of total revenues.
• D)a percentage of net accounts receivable.

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Definitions:

Default Risk

The potential that a borrower will fail to meet the obligations of a loan or debt agreement.

Mortgages

Loans specifically designed for the purchase of real estate, secured by the property itself.

Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations.

Financial Reports

Documentation that outlines an organization's financial status and performance over a specific period.