https://youtu.be/r3YPSwFsIps Watch A. Mursau\'s video titled \"Accounts Receivab

Question

https://youtu.be/r3YPSwFsIps

Watch A. Mursau's video titled "Accounts Receivable Bad Debt Expense (Direct Write Off Method Vs Allowance Method)":

Click here to open the video in a new window.

Based on the information in the video, discuss the primary advantages and disadvantages of applying the direct write-off over the allowance method of writing off accounts. Take a position on whether or not estimating the allowance for doubtful accounts provides the opportunity to distort gross income.

Provide support for your rationale.

Explanation / Answer

Advantages:

Disadvantages

This allowance recording, records the loss from the uncollectible accounts. Non recording of this allowance will result in recording of prior period loss from the unrelated income. This results in distortion of mating principle of GAAP. Hence it can be concluded that non recording of the allowance provides the opportunity to distort gross income.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.