Ratio of Allowance for Uncollectible Accounts

The ratio of Allowance for Uncollectible Accounts depends on either on the Percentage of Sales Method (Income Statement Method) or the Percentage of Receivables Method (Balance Sheet Method) under the Allowance Method.

It is for company to choose which method is best to fit to the business line. Based on the past experience, the aging of accounts or Balance Sheet method may be better than the percentage of sales method.