Bank of the Pacific is a local bank operating primarily in Portland,Oregon.The bank accepts deposits from and makes loans to local businesses and individuals.Which of the following accounting estimates would be most important for Bank of the Pacific?
A)Uncollectible accounts receivable.
B)Warranty claims.
C)Total units of production.
D)Sales returns.

Question

Quizplus · Accepted Answer

Uncollectible accounts receivable are important for a bank as they relate to the possibility of loan defaults and bad debts. As the bank primarily operates by accepting deposits and makes loans, it is crucial for the bank to estimate the likelihood of uncollectible accounts and create appropriate provisions for them on its balance sheet.

Bank of the Pacific Is a Local Bank Operating Primarily