Income statement approach

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Income statement approach is a method that estimates the amount of Bad Debts Expense that will result based on a percentage of net credit sales for the period. The amount of the expected bad debts is added to the existing balance of Allowance for Doubtful Accounts.


Definitions

According to College Accounting: A Practical Approach by Slater (13th edition)‎,

Income statement approach. A method that estimates the amount of Bad Debts Expense that will result based on a percentage of net credit sales for the period. The amount of the expected bad debts is added to the existing balance of Allowance for Doubtful Accounts.

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