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.