Ken's Candy has been selling to Art's Quik Mart for thirty years.Lately Art's has been paying its bills increasingly slowly.Right now,Ken's Candy has $10,000 in accounts receivable on its books from Art's Quik Mart for candy sold to Art's over the last six months.Art's Quik Mart says it will pay the bill as soon as it can.Ken's Candy is trying to decide whether it should increase its allowance for uncollectible accounts to cover the amount owed by Art's.If Ken's Candy increases the allowance,this accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

Increasing the allowance for uncollectible accounts is a conservative approach as it assumes that Art's Quik Mart may not be able to pay its bills in the future. This approach is cautious and considers the worst-case scenario to ensure that the financial statements accurately reflect the company's financial position.

Ken's Candy Has Been Selling to Art's Quik Mart for Thirty