In determining the adequacy of the allowance for uncollectible accounts, the least reliance should be placed upon which of the following?
A)The credit manager's opinion.
B)An ageing schedule of past due accounts.
C)Collection experience of the client's collection agency.
D)Ratios calculated showing the past relationship of accounts receivable to net credit sales.

Question

Quizplus · Accepted Answer

The credit manager's opinion may be biased or subject to manipulation, as they have a vested interest in presenting a positive picture of the company's financial position. The other options provide more objective and reliable information for determining the adequacy of the allowance for uncollectible accounts.

In Determining the Adequacy of the Allowance for Uncollectible Accounts