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14 January, 05:26

If the allowance method of accounting for uncollectible receivables is used how does recording the recover of an uncollectible account affect the elements of the financial statements?

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  1. 14 January, 05:50
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    The recovery of accounts receivable is the culminating phase of the credit sales process, which causes, among other things, a liquidity problem, that is, a financial aspect, since on the one hand, although the sales have been planned, there are complex situations that cannot be assessed or anticipated with precise results; but on the other hand it is even more complex to forecast the probabilities of the collections originated from the credit sales made more than anything in the case of the businesses that are started, which need funds for the acquisition of new stocks, in order to respond to the Increase in sales This fact makes it necessary to have theoretical knowledge of the value of working capital capable of covering that financial situation.
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