According to GAAP, uncollectible receivables must be estimated and recorded as an expense in the period in which the corresponding revenue is earned. This ensures compliance with the matching principle.

(1) Compare and contrast the percent of revenue method and the percent of receivables method.

(2) Why would a financial manager or analyst be concerned if the Allowance for Doubtful Accounts balance increased or decreased significantly?

Answer rating: 100% (QA)

Solution 1Difference between the percent of revenue method and the percent of receivables method Percent of Receivables Method a It is used to derive ... View the full answer