The Percentage of Sales Basis of Estimating Expected Uncollectibles

The Percentage of Net Sales Basis (Income Statement-Approach) of estimating expected Uncollectible Accounts is based upon Matching Principle GAAP (Generally Accepted Accounting Principles), because Net Credit Sales, which is a Revenue, is matched with the Uncollectible Accounts Expense for the period.

The purpose of this estimation is to provide true and fair view of Financial Statements to the Users of Financial Statements / Information so that relevant and reliable information is presented for the Unpaid invoices and our revenue should be seen in a safe way in order to avoid and control uncertainty exists between actual sales and estimated sales.