Asked by Shilpa Heald on May 04, 2024
Verified
Discuss the (a) focus and (b) financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.
Percent Of Sales Method
A financial forecasting model that estimates future financial statements based on assumed sales growth and historical financial ratios.
Bad Debts
Unrecoverable amounts owed to a company by debtors that are deemed uncollectable and written off as a loss.
Receivables Methods
Methods used by businesses to manage and account for money owed to them by customers for goods or services delivered on credit.
- Measure the anticipated expense from doubtful accounts and realize its impact on financial disclosures.
Verified Answer
(b) The allowance for doubtful accounts is the focus of the analysis of receivables method. It places more emphasis on the net realizable value of receivables and thus emphasizes the balance sheet.
Learning Objectives
- Measure the anticipated expense from doubtful accounts and realize its impact on financial disclosures.
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