Final answer:
The statement is true. The aging of accounts receivable method estimates the Allowance for Doubtful Accounts balance, while the percentage of credit sales method estimates Bad Debt Expense for the period.
Step-by-step explanation:
True: The aging of accounts receivable method focuses on estimating the ending balance in the Allowance for Doubtful Accounts, which is the contra account reflecting the estimated uncollectible amounts in accounts receivable. This method categorizes receivables based on how long they have been outstanding, assigning a higher percentage of uncollectability to older accounts.
On the other hand, the percentage of credit sales method estimates the Bad Debt Expense for the accounting period directly, often as a fixed percentage of the total credit sales made during the period. Both methods are used in accounting to make appropriate estimates for doubtful accounts, but they focus on different financial statement components: one on the balance sheet (aging method) and one on the income statement (percentage of sales method).