The Allowance for Doubtful Accounts Balance Will Not Be a Precise

question 86

Multiple Choice

The allowance for doubtful accounts balance will not be a precise amount because of which of the following reasons?

• A)It is an accounting estimate based upon judgment.
• B)GAAP is not clear on the calculation of the allowance.
• C)It is merely a reserve that is reversed by the client as income is needed for profitable results.
• D)The precision is determined by the results of confirmation responses.

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Definitions:

Need For Autonomy

A person's desire or requirement for independence and self-direction in their actions and decisions.

Bureaucratic Rules

Formalized regulations and procedures designed to structure operations and decision-making within organizations.

Stringent Guidelines

Strict, precise, and exacting rules or instructions designed to be followed in a particular field or activity.

Murray's Manifest Needs Theory

A psychological theory proposed by Henry Murray, which describes human motivation in terms of underlying psychological needs.