discussion question 593

1. Watch this video on Bad Debts (Allowance Method, Direct Write Off) and discuss the primary advantages and disadvantages of applying the direct write-off over the allowance method of writing off accounts. Take a position on whether estimating the allowance for doubtful accounts provides the opportunity to distort gross income. Provide support for your rationale.

2. “Bad Debts” – Please respond to the following:

Assume that you work as an accounting manager and notice that the number of bad debt has increased significantly over the past year. Discuss what factors might be yielding this result and how you would address the problem.

Pick any business and with this specific business in mind, discuss some possible “early warning signs” to indicate that this business needs to review its bad debt holdings.

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