How To Calculate Allowance For Doubtful Accounts With Examples

ContentBusiness IncomeNature Of BusinessEditor's NotesSimilar TermsChegg Products And Services Risk Classification is difficult and the method can be inaccurate, because it’s hard to classify new customers. As well, customers in any risk category can change their behavior and start or stop paying their invoices. Many countries have very liberal laws that make it difficult to enforce collection on customers who decide not to pay or use “legal maneuvers” to escape their obligations. As a result, businesses must be very careful in selecting parties that are allowed trade credit in the normal course of business. When the total cost of an asset is expensed in the year acquired, total expense will be overstated and net income will be understated.If a current asset account balance increases over an accounting period, the…
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