Has many credit sales then it would be better to

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has many credit sales then it would be better to instead estimate an allowance for uncollectible credit accounts. That way the revenues and expenses are affected in each period and the sales numbers will represent the business' sales more accurately; provided the percentage is watched and adjusted as needed. Why might a business prefer a note receivable to an account receivable? A note receivable gives the business a stronger case to enforce payment from the client for a purchase because it is a formal financial instrument that establishes a contract between the two parties and therefore has a legal backing. An account receivable is nothing more than a promise to pay the merchant and can therefore be legally looked at as subjective if the merchant does not receive payment. Burden of proof to enforce payment is on the merchant and a note receivable will be legally binding. Chapter 10: What is the difference between land and land improvements?
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Christopher Reinemann
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