Mr.

Essay specific features

 

Issue:

Business

 

Written by:

Carol T

 

Date added:

January 12, 2014

 

Level:

University

 

Grade:

A

 

No of pages / words:

6 / 1677

 

Was viewed:

9751 times

 

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Essay content:

Various methods may be used in calculating the allowance for doubtful accounts. Chan and Baaz have the choice to follow specific identification of problem accounts or the percentage of sales method; both methods are permitted by GAAP. Establishing an allowance requires vigilance and careful estimations by management based on their opinions of the percentage of credit sales they don’t expect to recover...
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If management has a pessimistic outlook, the forecast for doubtful accounts is likely to be more than the actual loss from bad debt. In contrast, if management has an optimistic outlook, the forecast for doubtful accounts is likely to be less than the actual loss from bad debt. Events that haven’t yet occurred and that cannot be predicted also affect the difference in forecasts from actual amounts, for example the recession in this case...
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