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    yolybike's Avatar
    yolybike Posts: 1, Reputation: 1
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    #1

    Jan 16, 2007, 06:37 PM
    Doubtful Accounts
    What effect does lowering the estimate for doubtful accounts have on the income statement and Balance Sheet.
    Do you think recommendation to adjust allowance for doubt is within her right as a manager, or do you think this action is ethic's violation?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Jan 17, 2007, 02:16 AM
    Bad debt is an EXPENSE

    If you lower it, you have lowered an expense, therefore INCREASE Net Income on the income statement.

    Furthermore, you are increasing your shareholder's equity on your balance sheet.


    Manager.
    Can she suggest a change? YES

    Is it ethical for her to do so?
    Ethics is a wide subject. What are her motivations for the suggestion? To put the company in a better situation or to improve her bottom line?
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