Question

Which is a generally accepted method for accounting for uncollectible accounts when a company has a significant amount of expected bad debt losses?

1) Direct write-off method
2) Allowance method
3) Accrual method
4) Cash method

Answer 1

The generally accepted method for accounting for uncollectible accounts when a company has a significant amount of expected bad debt losses is the Allowance method.

Step-by-step explanation:

The generally accepted method for accounting for uncollectible accounts when a company has a significant amount of expected bad debt losses is the Allowance method. The Allowance method involves estimating and recording an allowance for bad debts as an expense in the same period that the sales are recorded. This allows the company to match the estimated bad debt losses with the related sales in the same period.