"Valuation of Accounts Receivables"
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.
Identify at least three (3) risk factors inherent in estimating the amount of customer write-offs. Explain the procedural steps in which accountants or auditors would follow to identify where material misstatement of receivables and associated gross income has occurred. Explain your rationale.
"Bad Debts"
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.