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When comparing the Percentage of Receivables Method to the Aging of Receivables Method, which is likely...

When comparing the Percentage of Receivables Method to the Aging of Receivables Method, which is likely to result in a more accurate estimate of the Allowance for Bad Debts, and why?

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Answer #1

Answer : The aging for accounts receivable will provide more accurate estimate of allowance for bad debts .

Explanation: Because aging method takes into account the time period. That is the time from which the accounts receivables are due for payment but still remain unpaid .Where as in percentage of receivable directly an estimated percentage is taken of receivable as allowance for bad debt. So aging of accounts receivable will provide more accurate results for the estimates of allowance for bad debt.

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