In this lesson, uncover the nuances of how to handle uncollectible receivables in accounting with the help of Nick Palazzolo, CPA. Diving into the allowance method preferred by GAAP and FASB, he clarifies how to estimate potential losses using the allowance for doubtful accounts. Nick contrasts this with the direct write-off method, explaining how it differs in addressing receivables unlikely to be collected. With practical examples, he demonstrates the process of estimating allowances through the percentage of sales and percentage of receivables methods, making a potentially complex topic accessible. The lesson thoroughly explores these concepts, ensuring a comprehensive understanding of the allowances and their impact on financial statements.
Lesson: Accounting for Uncollectible Receivables
In this lesson, uncover the nuances of how to handle uncollectible receivables in accounting with the help of Nick Palazzolo, CPA. Diving into the allowance method preferred by GAAP and FASB, he clarifies how to estimate potential losses using the allowance for doubtful accounts. Nick contrasts this with the direct write-off method, explaining how it differs in addressing receivables unlikely to be collected. With practical examples, he demonstrates the process of estimating allowances through the percentage of sales and percentage of receivables methods, making a potentially complex topic accessible. The lesson thoroughly explores these concepts, ensuring a comprehensive understanding of the allowances and their impact on financial statements.
Updated: Oct. 20, 2021 Create an account