If a company is bad debt expenses that are a material item on the income statement. They are required to use the allowance method of accounting for bad deaths in the allowance method. We’re going to estimate the accounts that we think will go bad, and set up a provision on our balance sheet on an allowance, on our balance sheet for the accounts that we think will go bad. So it’s a very different approach the allowance method because now we estimate the accounts we think we’ll go back and set up an allowance on our balance sheet for the accounts we think we’ll go back. Disclaimer: These Bisk CPA Review videos were last updated in 2015 and are for entertainment purposes only. These CPA Exam prep videos are old. You should assume that most of the CPA Review content in these videos is outdated and not suitable for […]
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