chap 5: estimation of doubtful accounts Flashcards
it involves an analysis where the accounts are classified into not due or past due.
aging of accounts receivable
it has the advantage of presenting fairly the accounts receivable in the statement of financial position at net realizable value.
aging method
the method that violates the matching process.
aging method
when thus method is used n computing doutbful accounts, proper matching of cost against revenue is achieved.
percent of sales method
it is an income statement approach because it favors the income statement.
present of sales method
accounts receivable may not be shown at estimatec realizable value because the allowance for doubtful accounts may prove excessive or inadequate.
percent of sales method
what are the 3 estimation of doubtful accounts?
- aging of ar 2. percent of ar 3. percent of sales
certain rate is multiplied by the open accounts at the end of the period to get the required allowance balance.
percent of ar
has the advantage of presenting the ar at estimated nrv. the approach is also simpel to apply.
percent of ar
the application of this approach violates the principle of matching bad debt loss against sales revenue.
percent of ar
amount of sales for the year is multiplied by a certain rate to get the doubtful accounts expense.
percent of sales
the rate to be used is computed by dividing the bad debt losses in prior years by the charge sales of prior year.
percent of sales
rate thus obtained is multiplied by the current’s year charge sales to arrive at the doubtful accounts expense.
percent of sales
used in computing doubtful accounts, proper matching cost against revenue is achieved.
percent of sales
true or false: when percentage of sales is used for estimating doubtful accounts, bad debts expense is measured directly and allowance for bad debts is measures indirectly.
true
