Relationship between bad debts and net credit sales


An advantage of basing bad debt expense on the historical relationship between bad debts and net credit sales is that:

a) it provides the best estimate of the net realizable value of accounts receivable

b) it provides the best information to the credit department to use in its collection activities

c) it best adheres to the matching concept

d) it considers the balance in the allowance account when making the bad debt expense estimate

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Accounting Basics: Relationship between bad debts and net credit sales
Reference No:- TGS096821

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