ACC 502 Grand Canyon University Corporate Financial Reporting and Analysis Discussion – Description
Respond to Question 5 from Chapter 8 of the textbook: Consider the following statement: “The fewer the uncollectible accounts, the better.” Can you think of instances where this might not be the case? Support your points with an example of why fewer uncollectible accounts may not be better for business. Participate in follow-up discussion by reviewing the fact patterns described by classmates and change them to try to prove the point that fewer uncollectible accounts are not better. Fewer accounts uncollectible generally will be in the best interest of the company. This would mean that the company received what it had forecasted it would in return for the product or supply that was determined. If I give or sell 50% worth of supply and am expecting 50% in return, then I am collecting what the account should be. This would mean I can easily plan and grow my business and get what my contracts have stated. In some cases, having uncollectible accounts can be beneficial as there may be a percentage of interest attached to uncollectable accounts which would lead to a greater revenue share in the end. There may also be an opportunity to write off accounts which may lead into a company paying less in taxes. This has no affect on earning or the income statement. One industry that this may benefit could be a bank. If there are banks that allow for a mortgage rate, but that mortgage becomes uncollectable the house (asset) would then become the banks which then they can in turn resale. Another company be me a start up company like a contractor who has their financials in a lot of areas. If they received an uncollectable for some reason, in this industry usually this can be paid back by labor on the back end which would not show up as a paid account but still beneficial to the company in the long run . References:Young, S. D., Cohen, J., & Bens, D. A. (2018). Corporate financial reporting and analysis (4th ed.). Wiley. This is our assignment chapter Corporate Financial Reporting and Analysis: A Global PerspectiveRead Chapters 8 and 9 in Corporate Financial Reporting and Analysis: A Global Perspective.
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