Suppose we were to change asset depreciation on buildings and furniture and equipment from 5% and 10% to 4% and 8%, respectively. What would be the effect on net income? Would it increase or decrease? Likewise, suppose that our estimate of the balance in Allowance for Bad Debts was reduced from $1,100 to $ 1,000. What would be the effect on net income? Is the adjusting entry process an exact science, where accountants can determine exactly how well a company has done for a period? Or, is accounting an art that requires significant judgment on the part of the accountant? What are the dangers for the accountant when making an estimate in an area (such as, bad debts) where significant judgment is required?