Percentage-of-receivables method:
It is a method of estimating the
Percentage of credit sales method:
It is a method of estimating the bad debts (loss on extending credit), by multiplying the expected percentage of uncollectible based on the total amount of credit sales for a specific period. This method is otherwise known as income statement method.
To determine: The manner in which the percentage of receivables is referred to as the balance sheet method and the percentage of credit sales method is referred to as the income statement method.
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Financial Accounting
- Which method, the percentage-of-receivables method or the percentage-of-credit-sales method, is typically used in practice? Why?arrow_forwardDescribe the relationship between debit balances and credit balances when it comes to “t graphs”?arrow_forwardare used to measure the speed in which various accounts are converted into sales or cash. Select one: a. Debt ratios O b. Activity ratios C. Profitability ratios O d. Liquidity ratiosarrow_forward
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