During the audit of accounts receivable of Montana Company, the new CEO, Joe Frisco, asked why the

Question:

During the audit of of Montana Company, the new CEO, Joe Frisco, asked why the company had debited the current-year expense for bad debts on the assumption that some accounts will become uncollectible next year. Frisco believes that the should be based on verifiable, objective evidence. In his opinion it would be more objective to wait until specific accounts become uncollectible before the expense is recorded. What accounting issues are involved? Which method of accounting for uncollectible accounts would you recommend and why?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...