QuestionJuly 15, 2025

Which of the following is true about the aging method? A No estimate for uncollectible accounts needs to be made. B Older accounts are more likely to be collected. C It is not acceptable for GAAP. D Older accounts are less likely to be collected.

Which of the following is true about the aging method? A No estimate for uncollectible accounts needs to be made. B Older accounts are more likely to be collected. C It is not acceptable for GAAP. D Older accounts are less likely to be collected.
Which of the following is true about the aging method? A No estimate for uncollectible accounts needs to be made. B Older accounts are more likely to be collected. C It is not acceptable for GAAP. D Older accounts are less likely to be collected.

Solution
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Answer

D Older accounts are less likely to be collected. Explanation 1. Identify the Aging Method Principle The aging method involves estimating uncollectible accounts based on the age of each account. Older accounts are generally considered less likely to be collected. 2. Evaluate Each Option A: Incorrect, as estimates for uncollectible accounts are necessary. B: Incorrect, older accounts are less likely to be collected. C: Incorrect, the aging method is acceptable under GAAP. D: Correct, older accounts are less likely to be collected.

Explanation

1. Identify the Aging Method Principle<br /> The aging method involves estimating uncollectible accounts based on the age of each account. Older accounts are generally considered less likely to be collected.<br /><br />2. Evaluate Each Option<br /> A: Incorrect, as estimates for uncollectible accounts are necessary.<br /> B: Incorrect, older accounts are less likely to be collected.<br /> C: Incorrect, the aging method is acceptable under GAAP.<br /> D: Correct, older accounts are less likely to be collected.
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