accounting receivables valuation

Accounting
Tutor: None Selected Time limit: 1 Day

Discuss the primary advantages and disadvantages of applying the direct write-off and the allowance method of writing off accounts. take a position on whether or not estimating the allowance for doubtful accounts distorts gross income. 

Aug 30th, 2014

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Answer:

  Advantages:

·  Simple accounting entries are entered in books of accounts.

·  It takes less time to make an adjustment after this. 

Disadvantages:

·  Chances of committing errors are more causing material misstatements.

·  This is against matching principles.

·  Profit amount can be overstated easily.

Estimation of provision for doubtful debts contains careful procedures to calculate amount, hence this cannot distort gross income figure. 

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Aug 30th, 2014

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Aug 30th, 2014
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Aug 30th, 2014
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