Final answer:
The two methods of accounting for uncollectible accounts, percentage of sales and percentage of receivables, are indeed true and are commonly used under GAAP for estimating doubtful debts.
Step-by-step explanation:
The statement that the two methods of accounting for uncollectible accounts are (a) percentage of sales and (b) percentage of receivables is true. These are the primary methods used in accounting to estimate and account for the doubtful accounts, which are debts that are not expected to be collected.
- Percentage of sales method - This method estimates uncollectible accounts based on a fixed percentage of sales for a period. It emphasizes the income statement and the matching principle, as it matches sales revenues with the estimated expenses from uncollectible accounts.
- Percentage of receivables method - This method estimates uncollectible accounts based on a fixed percentage of the accounts receivable at the end of a period. It focuses more on the balance sheet, ensuring that accounts receivable are reported at their net realizable value.
Both methods are acceptable under generally accepted accounting principles (GAAP) and each has different implications for financial reporting and analysis.