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Chapter 2 Discussion 52

Chapter 2 Discussion 52 - you decrease bad debit the less...

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Accountants will determine how long buildings and furniture and equipment are to last, but they will do this by looking at all the information that is given to them that explains the condition, life, and warranty, ect. ..of them. They are the ones that also ones that determines the dollar amount of accounts receivable that our doubtful. When they look at the past accounts they can come pretty close to determine the ones that are going to happen the next year. If you increase the depreciation percentage then you are increasing the expenses which in return will decrease your net income for that year. Also your building, furniture, and equipment will decrease in value faster. Anytime you reduce the allowance for bad debit you are increasing net income but the more
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Unformatted text preview: you decrease bad debit the less you will have as a backup for when needed. I believe that it is both a science and an art. It is an art because they do have to be so good and exact at what they do and a science because if they are doing their job exactly then they will be able to determine how well a company has done for that period. If the accountant was to make a wrong estimate where they would need to be specific it could cause all kinds of problems. Some could be statements wrong, misreported information, trouble with the IRS, SEC, ect…or company falling in financial difficulty. In any circumstance the accountant needs to make sure to make precise decisions and be on top of everything that is going on in their company....
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