Question

The allowance method of accounting for bad debts has the following advantages over the direct write-off method including:_________.

A. Records estimated bad debts expense in the period when the related sales are recorded.
B. Records estimated bad debts expense when the account receivable is determined to be uncollectible.
C. Reports accounts receivable on the balance sheet at the estimated amount of cash to be collected
D. Reports sales on the income statement at the estimated amount of cash to be collected

Answer 1

A) Records estimated bad debts expense in the period when the related sales are recorded.

C) Reports accounts receivable on the balance sheet at the estimated amount of cash to be collected

Step-by-step explanation:

The allowance method cannbe regarded as ways used in reporting bad debts expense which comes from the action of the company by selling goods/services on credit.

The direct write-off method can be regarded as accounting method whereby uncollectible accounts receivable is been written off inform of bad debt. It should be noted that The allowance method of accounting for bad debts has the advantages over the direct write-off method in ways like

✓ Records estimated bad debts expense in the period when the related sales are recorded.

✓Reports accounts receivable on the balance sheet at the estimated amount of cash to be collected