Response to the following questions:
1. A firm has consistently adjusted its allowance account at the end of the fiscal year by adding a fixed percent of the period's net sales on account. After five years, the balance in Allowance for Doubtful Accounts has become very large in relationship to the balance in Accounts Receivable. Give two possible explanations.
2. Which of the two methods of estimating uncollectibles provides for the most accurate estimate of the current net realizable value of the receivables?