You Decide: Can a company overestimate bad debts in good years and then use lower estimates when
Question:
You Decide: Can a company overestimate bad debts in good years and then use lower estimates when times are bad?
The company you work for has been highly profitable this year. Your boss tells you to overestimate the allowance for doubtful accounts. He says the income statement can handle the charge this year and the excess reserve can be used to increase earnings in future years. Is his proposal acceptable?
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Answered By
Jehal Shah
I believe everyone should try to be strong at logic and have good reading habit. Because If you possess these two skills, no matter what difficult situation is, you will definitely find a perfect solution out of it. While logical ability gives you to understand complex problems and concepts quite easily, reading habit gives you an open mind and holistic approach to see much bigger picture.
So guys, I always try to explain any concept keeping these two points in my mind. So that you will never forget any more importantly get bored.
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Related Book For 
Accounting Concepts And Applications
ISBN: 9780324376159
10th Edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice, Monte R. Swain
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