Final answer:
The aging-of-receivables method is a balance sheet approach used to estimate uncollectible accounts, categorizing receivables based on the time they have been outstanding.
Step-by-step explanation:
The aging-of-receivables method is an accounting technique used to estimate uncollectible accounts. Specifically, it is a) a balance sheet approach, as it focuses on accounts receivable and evaluates the likelihood of their collection. This method categorizes receivables based on how long they have been outstanding, with the assumption that the longer a receivable has been outstanding, the less likely it is to be collected. Banks and other financial institutions use this method to estimate the amount of loans that may not be repaid. They include this estimation in their annual expenses and the calculation impacts the perceived value of the bank's loan assets on its balance sheet.
While the aging-of-receivables method is commonly used, b) it is not required to be used by all companies. Each company may decide the most appropriate method for estimating bad debts based on the principle of the most relevant and faithful representation of accounts receivable. This method is considered acceptable and is commonly used, so c) suggesting that it is not an acceptable method of estimating bad debts would be incorrect. Finally, d) an income statement approach, which the aging-of-receivables method is not, would focus more directly on the amount of expense to be recognized in a given period.