How Can Accounting for Bad Debts Be Used for Earnings

question 41

Multiple Choice

How can accounting for bad debts be used for earnings management?

• A) changing the percentage of aged receivables that comprise the allowance balance
• B) using the direct write-off method to determine bad debt expense
• C) determining which accounts to write-off
• D) reversing previous write-offs

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Definitions:

Retailing-oriented Era

A period in business history marked by the dominant focus on retail activities, where selling direct to customers through various retail outlets was prioritized.

Production-oriented Era

A period in business where the focus was on production efficiency and product improvement, often at the expense of consumer needs and preferences.

Sales-oriented Era

A period in business history when companies prioritized selling their products and convincing consumers to buy, often regardless of actual customer need.

Market-oriented Era

A period in business characterized by firms prioritizing customer needs and desires, focusing on market research, and product development to meet those needs.