ALLOWANCE METHOD Definition

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ALLOWANCE METHOD is the accepted way to account for bad debt. Bad debt expense may be based on the percent of credit sales for the period, an aging of the accounts receivable balance at the end of the period, or some other method, e.g., percent of accounts receivable.

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RETROSPECTIVE is to be concerned with or related to the past, e.g. managements review of the prior years performance.

 EQUIPMENT TRUST CERTIFICATE is a bond that is secured by a first claim (lien) on certain equipment. The title to the equipment is held in trust until the bond is paid off.

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