The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:
The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:
The percentage of sales method is used to estimate uncollectible accounts as it aligns with the matching principle. The matching principle dictates that expenses should be matched to the revenues they help to generate, which is accomplished by estimating uncollectible accounts as a percentage of sales. This method ensures that bad debt expense is recorded in the same period as the related sales revenue, thereby providing a more accurate measure of profitability for that period.
D is correct .. A pertains to the Balance sheet method B is irrelvant because allowance will be created in both the method C is not plausible reason
All the other answers are specifically related to accounts receiveables rather than sales.
Where can we can the explanations for the correct answers?