Question

Under GAAP, the expense associated with the uncollectibility of accounts receivable is typically calculated and recorded based upon estimations of uncollectibility.

A.True
B.False

Answer 1

Under GAAP, the expense associated with the uncollectibility of accounts receivable is typically calculated and recorded based upon estimations of uncollectibility.

Step-by-step explanation:

Under Generally Accepted Accounting Principles (GAAP), the expense associated with the uncollectibility of accounts receivable is typically calculated and recorded based upon estimations of uncollectibility. This is done to reflect the true financial position and results of an entity.

For example, a company may need to estimate the percentage of accounts receivable that will not be collected due to customer defaults or financial difficulties. This estimate is then used to calculate the amount of the expense that should be recognized on the income statement.

It is important to note that these estimations involve judgment and should be based on historical experience, industry trends, and any specific information about individual customers.