Answer:
The answer is: True
Step-by-step explanation:
Percentage of receivables method is referred to as the balance sheet method because it is used to calculate bad debts to ending accounts receivable ratio = (bad debts / ending accounts receivable) x 100
It is helpful because it serves as reference to future bad debts. For example, if the company's bad debt have consistently been 8% of total accounts receivable in the past, we can predict that in the future 8% of our accounts receivables will also be bad debt. It is not an exact science but at least it gives us an idea.