18Nov 2021
Allowance for Doubtful Accounts Intermediate Financial Accounting II Vocab, Definition, Explanations Fiveable
Two primary methods exist for estimating the dollar amount of accounts receivables not expected to be collected. If it does not issue credit sales, requires collateral, or only uses the highest credit customers, the company may not need to estimate uncollectability. Including an allowance for doubtful accounts in your accounting can help you plan ahead and avoid cash flow problems when payments don’t come in as expected. Let’s consider a situation where BWW had a $20,000 debit balance from the previous period. This application probably violates the matching principle, but if the IRS did not have this policy, there...
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