Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period? The IRS rules require the company to make the estimate. To determine the gross realizable value of accounts receivable. To match bad debt expense to the period in which the revenues were earned. To allow the collection department to schedule work for the next accounting period.

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Business

Alena Russo

25 October, 00:08

Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period? The IRS rules require the company to make the estimate. To determine the gross realizable value of accounts receivable. To match bad debt expense to the period in which the revenues were earned. To allow the collection department to schedule work for the next accounting period.

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Mendez · Answer 1

Under the allowance method of accounting for bad debts, uncollectible accounts receivable are estimated at the end of the accounting period to match bad debt expense to the period in which the revenues were earned.

Explanation:

Allowance method as a term in financial accounting means uncollectible accounts receivable process that records an estimate of bad debt expense in the same accounting period as the sale.

The purpose of allowance method is to adjust accounts receivable appearing on the balance sheet.

therefore, under the allowance method of accounting for bad debts, uncollectible accounts receivable are estimated at the end of the accounting period to provides better matching of expenses and revenues on the income statement matching bad debt expense to the period in which the revenues were earned.