Overestimating the allowance for uncollectible accounts receivable can shift income from the current period into one or more future periods.

Question

Quizplus · Accepted Answer

Overestimating the allowance for uncollectible accounts receivable reduces current period income by increasing the expense for bad debts, which can lead to higher income in future periods as actual bad debts turn out to be less than anticipated.

Overestimating the Allowance for Uncollectible Accounts Receivable Can Shift Income