The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts Question 36 options: is relevant when using the percentage of receivables basis. is relevant when using the percentage of sales basis. is relevant to both bases of adjusting for uncollectible accounts. will never show a debit balance at this stage in the accounting cycle
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The balance of Allowance for Doubtful Accounts prior to making the
Question 36 options:
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is relevant when using the percentage of receivables basis. |
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is relevant when using the percentage of sales basis. |
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is relevant to both bases of adjusting for uncollectible accounts. |
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|
will never show a debit balance at this stage in the accounting cycle. |
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