The Percent-Of-Sales Method for Computing Uncollectible Accounts

question 21

Multiple Choice

The percent-of-sales method for computing uncollectible accounts:

• A)computes Uncollectible-Account Expense as a percent of accounts receivable.
• B)takes a balance sheet approach.
• C)employs the expense recognition (matching)concept.
• D)will result in the same amount of estimated Uncollectible-Accounts Expense as the aging-of-receivables method.

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Definitions:

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, or the return on investment.

Misrepresentation

The act of providing false, misleading, or incorrect information typically in a contractual context, leading to an erroneous belief by another party.

Material Omission

The failure to include vital information that results in a deceptive representation, significant in legal and financial disclosures.

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