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Uncellectible account is classified as a current liability?
Zackie Company has recently allowed its customers to make purchases on credit. The terms are 2/10, n/30. Unfortunately, Zackie Company has found that not all of its credit customers pays their bill on time. Accordingly, Zackie Company has estimated an allowance for uncollectible account and will match this bad debt expense against the credit sales. On Zackie Company's financial statement, the allowance for uncellectible account is classified as a current liability.
A) What is the potential accounting problem? |
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