Accy 301 essay questions - ACCY 301 Fall Essay Questions 1 Bad Debt Expense allowance approach record estimated bad debt expense in the period when

Accy 301 essay questions - ACCY 301 Fall Essay Questions 1...

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ACCY 301 Fall Essay Questions 1. Bad Debt Expense “allowance approach”- record estimated bad debt expense in the period when related credit sales are made matching principle- requires that some estimate of uncollectible accounts be offset against current period sales Income Statement (% of sales) vs. Balance sheet (% of receivables) I.S.- consistent with matching concept. Emphasis on matching bad debts associated credit sales, does not necessarily result in NRV in balance sheet B.S. emphasis is not on matching bad debt expense with sales revenue. Rather, it is on measuring NRV of A/R on balance sheet 2. A company that uses LIFO can manipulate income both up and down by simply controlling the timing of inventory purchases. Assuming that the inventory prices are generally increasing, income can be increased by inducing a LFO liquidation through purchasing less inventory toward the year end, and vice versa (by purchasing more inventory toward the year end) 3.

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