When the amount we expect to be collect can be determined

Reference no: EM13601264

When the amount we expect to be collect can be determined, then the revenue is recognized to the extent that collections are expected." From the statement, it appears that revenue cannot be recognized on a receivable until an allowance for doubtful accounts is created and adjusted. The revenue recorded would then be only the remainder. Based on this thought, wouldn't companies be able to manipulate their data to decrease revenue by inflating the doubtful accounts? Or, a company can do the opposite to give the appearance of increased revenue. Based on the manipulation of this one account a company will be able to increase or decrease revenue. What are your thoughts on this?

Reference no: EM13601264

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