ACCT 2100 Lecture Notes - Lecture 11: Accounts Receivable, Promissory Note, Accrued Interest
Document Summary
We first introduced accounting for receivables in chapter 2. This chapter presented additional complexities related to accounts receivable, such as the allowance method of accounting for uncollectible accounts. The allowance method improces matching of expenses with revenues. It also provides a more accurate measure of the value of accounts receibale on the balace sheet. Under the allowance method, estimated uncollectible accounts expense is recorded in an adjusting entry at the end of the period in which a company has made credit sales. There are two methods commonly used to estimate the amount of uncollectible accounts expense: the percent of revenue method and the percent of receivables method. With th epercent of revenue method, uncollectible accounts expense is measured as a percent of the period"s sales.
