Accounting Dictionary - Letter P

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Percentage-of-sales approach
(also called income statement approach) states that the amount of bad debt expense to be recognized by a company is calculated as a percentage of credit sales generated during the current accounting period. This approach does not consider the balance in the allowance for doubtful accounts because such balance is not used in the calculation of bad debt expense.
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