Taylor uses the balance sheet approach to estimate bad debt expense.

How could a company with receivables like Taylor be able to manage earnings in applying generally accepted accounting principles?

Select one:

a$.$

In good years Taylor may be conservative and over$-$estimate the allowance account $($thereby increasing the expense$)$ and in bad years underestimate the allowance account $($increasing earnings$).$

b$.$

GAAP does not allow for earnings management.

c$.$

In good years Taylor may be conservative and over$-$estimate the allowance account $($thereby decreasing the expense$)$ and in bad years underestimate the allowance account $($decreasing earnings$).$

d$.$

The SEC forbids companies from managing earnings.