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Each Person Goes About Her Daily Business Seeking to Maximize

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Each person goes about her daily business seeking to maximize her own self interests.In doing so, she contributes to the welfare of society at large.This is the idea underlying Adam Smith's "invisible hand."


Definitions:

Bad Debts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.

Direct Write-Off Method

The method of writing off uncollectibles when they occur and thus not using the Allowance for Doubtful Accounts. This method does not fulfill the matching principle of accrual accounting.

Income Statement Method

A technique used to create a company's income statement to report earnings and financial performance.

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