Question

• Discussion Question 1: As a manager or owner, what insight can accounting information about accounts receivable and bad debts provide you to help make business decisions?
• Discussion Question 2: Which depreciation method would choose if you acquired new machinery with a 10-year life in which expect to use it more in the earlier years of its useful life? Why?

Answer 1

Answer:

1.

The data/information that a manager or a owner can get by having an understanding into the bookkeeping data about accounts receivable and bad debts is that how much amount of products are sold to the buyers on credit and what amount is the sum that the consumers can't pay for the merchandise that they had purchased. It will likewise assist with decide the how much of a provision is needed to be kept ahead of time for bad debts.

On the off chance that an organization has a high amount of accounts receivable however a small amount of bad debts then it shows that the organization is effective in doing the credit deals and gives products on credit just to those customers who can give the debt back. The manager or the proprietor can conclude that they can accomplish more credit sales as there is less possibility of it getting bad.

In the event that an organization has a high amount of accounts receivable and a high amount of bad debts then it shows that the organization is inefficient in doing the credit deals and gives products on credit to purchasers without a guarantee of getting the debt back. The manager or the proprietor can conclude that they can't accomplish more credit sales as there is more possibility of it getting debt.

2.

Double declining balance strategy is the method for depreciation that will be chosen if a machine with a long term life or 10 year life is obtained and when it is expected that it will be utilized more in the earlier years of it's useful life. It is on the grounds that the double declining balance strategy is a kind of accelerated depreciation technique that ascertains a higher depreciation charge in the primary year of a asset's life and steadily diminishes depreciation cost in ensuing years thus more depreciation will be charged in the prior years as it will be utilized more during that time and less depreciation in the resulting/subsequent years since it will be utilized less in that time.