In accounting, Cost of Goods Sold is an account used to track the costs associated with the manufacture of a product, including cost of raw materials, direct labor, packaging, and other direct costs....
Category: Accounting Basics
Inventory is an accounting of items owned by a business that will either be sold to customers or converted from raw materials into items that will be sold to customers. Inventory is an asset. It has...
Under the Percent of Sales Method for tracking bad debts, credit sales (not cash sales) are multiplied by a percent to arrive at the estimate for bad debts. That percentage will be based on the...
How to Use the Aging of Accounts Receivable Method for Bad Debts
Under the Aging of Accounts Receivable Method for accounting for bad debts, a company creates an estimate of bad debts based on the age of outstanding invoices. This estimate is based on a company's...
The Allowance Method for Doubtful or Uncollectible Accounts is used to estimate future bad debts based on current month revenues. Using past performance data, a company can estimate that a certain...
The direct write-off method for bad debts is a method used by smaller companies with few receivables. Debts are written-off at the time the debt is determined to be uncollectible. When is the...