The-definition.com

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

  • Partnership
    Partnership is an association of two or more persons to carry on as co-owners of a business ...
  • Credit memorandum
    Sometimes a depositor asks the bank to collect its notes receivable. In such a case, the ...
  • Plant assets
    Plant assets are resources that have three characteristics: they have a physical substance ...
  • Extraordinary items
    Extraordinary items are events and transactions that meet two conditions: They are (1) ...
  • Current liability
    A current liability is a debt that a company can reasonably expect to pay (1) from existing ...