Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 362: 12

Answer

The revenue recognition of bad debts relies heavily on judgment, which means that the management can use a higher or lower provision to tilt the odds in their favor. For instance, the management can use a low provision to increase liquidity.

Work Step by Step

As summarized above.
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