If a company is experiencing more writeoffs than were estimated,
A)the bad debt should be reduced next period.
B)the direct method should be implemented.
C)the percentage of bad debts should be increased next accounting period.
D)an adjustment should be made retrospectively.

Question

Quizplus · Accepted Answer

When a company experiences more write-offs than estimated, it indicates that the initial estimation of bad debts was too low. Therefore, the percentage of bad debts should be increased in the next accounting period to more accurately reflect the actual risk of uncollectible accounts.

If a Company Is Experiencing More Writeoffs Than Were Estimated