This estimation is based on the entire accounts receivable account, and is determined through accounts receivable aging or a percentage of sales. An example of a journal entry involving the allowance method is also included. The first is the direct write-off method, which involves writing off accounts when they are identified as uncollectible. Although bad […]

These are expenses that go toward supporting a company’s operations for a given period – for example, salaries of administrative personnel and costs of researching new products. Operating expenses are different from “costs of sales,” which were deducted above, because operating expenses cannot be linked directly to the production of the products or services being […]