Multiple Choice
An analyst notes that ABC Inc.'s allowance for uncollectible accounts as a percentage of year-end accounts receivable has changed.Which of the following would be a plausible explanation for the change?
A) ABC's management expects a default rate on outstanding receivables different than that which has occurred in prior years.
B) ABC's management is using bad debt accruals to "manage" earnings.
C) The company ages its receivables and the distribution of accounts receivable over the various age categories is different than in prior years.
D) All of these are plausible reasons for the noted change.
Correct Answer:
Verified
Correct Answer:
Verified
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