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Companies Use Two Methods to Account for Uncollectible Accounts, the Direct

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Companies use two methods to account for uncollectible accounts, the direct write-off method and the allowance method.


Definitions:

Receivables

Receivables are amounts owed to a business by its customers for goods or services delivered on credit, considered a current asset on the balance sheet.

Day-to-Day Operations

The routine activities that are necessary for a business or organization to function efficiently on a daily basis.

Warehouse Financing

A form of inventory financing where loans are made to manufacturers and processors on goods stored in a warehouse as collateral.

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