Income statement approach
Income statement approach is a method that estimates the amount of Bad Debts Expense that will result based on a percentage of net credit sales for the period. The amount of the expected bad debts is added to the existing balance of Allowance for Doubtful Accounts.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Income statement approach. A method that estimates the amount of Bad Debts Expense that will result based on a percentage of net credit sales for the period. The amount of the expected bad debts is added to the existing balance of Allowance for Doubtful Accounts.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
