Estimating bad debts is a done by companies as a way to anticipate and work with a realistic margin of error for accounts which are likely not to be received, this is a strategy for mitigating risk(Warren et al., 2021). When conducted under the allowance method, which requires an estimate, net income can be altered on the books if the estimates are inaccurate, but this is not nefarious nor can it not be solved with an adjusted entry. Companies can use historical data as a framework for how to control their estimates, or to determine if the total of the estimated bad debts are in a healthy and historical range. The criteria used to make the decision as to whether a debt account is at risk of being bad is important to note as well. There are warning signs associated with accounts, such as if the customer is bankrupt, if only partial payments are being made, and so on; this of course being contrasted with the more accurate and real-time but less useful-for-planning purposes write-off method, which records bad debts as they happen (Warren et al., 2021). These measures allow for the estimates to not be made in the dark