036 Allowance IS and BS Approach Flashcards
1
Q
Describe the income statement approach for bad debts.
A
Estimates bad debt expense as a percentage of credit sales.
2
Q
Describe the balance sheet approach for calculating an allowance balance.
A
Applies a percentage to ending accounts receivable.
3
Q
What purpose does analyzing ending accounts receivable serve?
A
The determination of the needed or desired balance in the allowance account.
