The Aging of the Accounts Receivable Approach to Estimating Uncollectible

question 116

Multiple Choice

The aging of the accounts receivable approach to estimating uncollectible accounts does not:

• A)Take into consideration the existing balance in the Allowance for Doubtful Accounts.
• B)Utilize a percentage of probable uncollectible accounts for each age group of accounts receivable.
• C)Stress the relationship between uncollectible accounts expense and net sales.
• D)Tend to give a reliable estimate of uncollectible accounts because of the consideration given to the collectability of specific accounts receivable.

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Definitions:

Revenue Accounts

are ledger accounts that track the income earned by a company from its normal business operations, which is then reported on the income statement.

Expense Accounts

Accounts used in accounting to record all expenses transactions made by a business.

Abbreviations

Shortened forms of words or phrases used for convenience.

Debit

An entry on the left side of an account record, used to increase an asset or expense or decrease a liability, equity, or revenue.