Hi, I need help with this transaction on a client, I only know he has violated at least one of the accounting assumptions, concepts or definitions but do not know which one.

I need to:

• Explain the main accounting concept or assumption & definition that has been violated
• Describe what the correct treatment should be.

Han, the owner of a transport business, is aware that the loss of large sums of money is probable because several customers were close to bankruptcy. The customers concerned probably would not be able to pay their debts. Han has decided that no allowance should be made because the losses have not yet occurred.

Please help, Thankyou