Accountıng I Deneme Sınavı Sorusu #1313947

"Under the percentage of Account receivable approach,.................."

Which statement appropriately comletes the sentence above?


companies establish a percentage relationship between the amount of account receivables and forecasted losses from bad debts accounts

each receivable amount is grouped with respect to sales due dates.

the company allocates the relevant amounts of receivables in association with their payment dates.

the company assigns percentages of estimates regarding the probability of collection

percentages are multiplied with the amounts of receivables in each group


Yanıt Açıklaması:

Firms often believe that they are able to forecast bad debts if they relate them to the balance in the Account Receivable account at the end of the period instead of the sales of that period. Under the percentage of Account receivable approach, companies establish a percentage relationship between the amount of account receivables and forecasted losses from bad debts accounts. Although this method is using account receivable rather than sales, the objective of both the approaches remain the same, i.e. the company uses past experience with bad debts to determine future amounts.

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