Definition

Percentage-of-sales

In the percentage-of-sales basis, management estimates what percentage of credit sales will be uncollectible. This percentage is based on past experience and anticipated credit policy.

The company applies this percentage to either total credit sales or net credit sales of the current year.

Share it:  Cite

More from this Section

  • Production budget
    Production budget is a projection of the units that must be produced to meet anticipated ...
  • Unit production costs
    Unit production costs are costs expressed in terms of equivalent units of production. ...
  • Petty cash fund
    Petty cash fund is a cash fund that is used to pay relatively small amounts such as the ...
  • Private/ Managerial accounting
    Private or managerial accounting is an area of accounting within a company that involves ...
  • Compensating error
    A compensating error is one which counter-balanced by any other error or errors, ...