Advantages And Disadvantages of the Allowance Method
Allowance Approach has both advantages and disadvantages in Accounting field. Here are some of the main Advantages and Disadvantages and brief explanation on these points. You may also be Interested in, “ Advantages And Disadvantages of Direct Off Method ” Advantages of Allowance Method 1. This method follows Accounting Principle Gaap as Sales are matched with Uncollectible Accounts Expense in the same period in which sales are recorded on credit basis. 2 This approach provides more details of customers past experiences based on Accounts Receivable Aging Report . The company deal with its customers in a safe mode as it sold goods to only those customers who have good credit outstanding. 3. This method works well where large number of sales are made on credit basis i.e., on Accrual Basis. Limitations / Disadvantages of Allowance Method 1. This method is expensive and time consuming as more ...