Discussion Question

Discussion Question

In financial accounting a bad debt is an amount that can be written off by a company/business as a loss. Bad debt is classified as an expense; because the debt has is unable to be collected (Web Finance). After all efforts have been tried to collect the debt, the company/ business writes off the debt by crediting the debtors account. This process eliminates the balance that is remaining on the account. The disadvantage of the method is it represents monies lost by a business and the process allows debtors to walk away from their debt in some cases. I would select the percentage of sales method for calculating doubtful accounts over percentage of receivables method; because the percentage of sales method will help changes quarterly or yearly (Lane A. Mark).

Discussion Question

In financial accounting a bad debt is an amount that can be written off by a company/business as a loss. Bad debt is classified as an expense; because the debt has is unable to be collected (Web Finance). After all efforts have been tried to collect the debt, the company/ business writes off the debt by crediting the debtors account. This process eliminates the balance that is remaining on the account. The disadvantage of the method is it represents monies lost by a business and the process allows debtors to walk away from their debt in some cases. I would select the percentage of sales method for calculating doubtful accounts over percentage of receivables method; because the percentage of sales method will help changes quarterly or yearly (Lane A. Mark).