The allowance method of accounting for bad debts has the following advantages over the direct write-off method including: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

A. Records estimated bad debts expense in the period when the related sales are recorded.

B. Records estimated bad debts expense when the account receivable is determined to be uncollectible.

C. Reports accounts receivable on the balance sheet at the estimated amount of cash to be collected

D. Reports sales on the income statement at the estimated amount of cash to be collected

Question

Business

Morton

15 July, 20:56

The allowance method of accounting for bad debts has the following advantages over the direct write-off method including: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

A. Records estimated bad debts expense in the period when the related sales are recorded.

B. Records estimated bad debts expense when the account receivable is determined to be uncollectible.

C. Reports accounts receivable on the balance sheet at the estimated amount of cash to be collected

D. Reports sales on the income statement at the estimated amount of cash to be collected

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Answers (1)

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Daugherty · Answer 1

A) Records estimated bad debts expense in the period when the related sales are recorded.

C) Reports accounts receivable on the balance sheet at the estimated amount of cash to be collected

Explanation:

The allowance method of accounting for bad debts calculates and records bad debt expense on the same period as the products or services were sold.

While the direct write-off method records bad debt expense only after the account has been deemed uncollectible. This may happen during the same sales period or later.