Which of the Following Statements Regarding the Allowance Method of Accounting

question 120

Multiple Choice

Which of the following statements regarding the allowance method of accounting for uncollectible receivables is incorrect?

• A) Bad debt expense is not estimated.
• B) The Allowance for Bad Debts is used to hold the pool of "unknown" uncollectible accounts.
• C) The business does not wait to see which customers will not pay when estimating the allowance for bad debts.
• D) The allowance method is based on the matching principle.

---

Definitions:

Life Expectancy

The average period that an individual is expected to live, based on statistical data.

Average U.S.

Typically refers to statistical norms or median values that represent the typical or standard characteristics of the United States population or its aspects.

Typical Caregiver

Often refers to the primary person who provides everyday care and support to a dependent individual, usually within a family or close-knit community setting.

College Education

A post-secondary education program that leads to an associate's, bachelor's, master's, or doctoral degree.