Title: Mr.

Essay Details

Subject: Business
Date: June 20, 2016
Level: University
Grade: A
Length: 6 / 1677
No of views: 0
Essay rating: good 0, average 0, bad 0 (total score: 0)

Essay text:

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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