The Allowance for Doubtful Accounts Will Not Be Precise by Either

question 37

Multiple Choice

The allowance for doubtful accounts will not be precise by either the client or the auditor because of which of the following?

• 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.

---

Definitions:

Performance Targets

These are specific goals set for employees or departments to achieve within a certain timeframe to measure effectiveness.

Bonus Pay Plans

Financial incentives provided to employees based on performance.

Law Of Effect

A psychological principle suggesting that behaviors followed by positive outcomes are likely to be repeated, whereas those followed by negative outcomes are less likely to be repeated.

Reinforcement Theory

A concept in behavioral psychology based on the idea that behavior can be shaped by controlling the consequences to those behaviors, emphasizing the use of reinforcement and punishment.