Definition

Allowance method

The allowance method of accounting for bad debts involves estimating uncollectible accounts at eh end of each period. This provides better matching on the income statement. It also ensures that companies state receivables on the balance sheet at their cash (net) realizable value.

Share it:  Cite

More from this Section

  • Operating leases
    The renting of an apartment and the rental of a car at an airport are examples of operating ...
  • Time ticket
    The time ticket is a document that indicates the employee, the hours worked, the account ...
  • Job Order Cost System
    Under a job order cost system, the company assigns costs to each job or to each batch ...
  • Total manufacturing costs
    Total manufacturing costs refer to the sum of direct materials, direct labor, and manufacturing ...
  • Manual accounting system
    Manual accounting system is a system in which someone performs each of the steps in the ...