Valuation of Accounts Receivables


“Valuation of Accounts Receivables”


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Accounts Receivable Bad Debt Expense (Direct Write off Method vs. Allowance Method)

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Then, discuss the primary advantages and disadvantages of applying the direct write-off and the allowance method of writing off accounts. Even though the direct write-off method is not acceptable for generally accepted accounting principles (GAAP) reporting, take a position on whether or not estimating the allowance for doubtful accounts distorts gross income. Propose an alternative method to increase the accuracy of reporting. Explain your rationale.

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