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  3. taylor uses the balance sheet approach to estimate

Taylor uses the balance sheet approach to estimate bad debt expense. How could a...

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Accounting

Taylor uses the balance sheet approach to estimate bad debt expense.
How could a company with receivables like Taylor be able to manage earnings in applying generally accepted accounting principles?
Select one:
a.
In good years Taylor may be conservative and over-estimate the allowance account (thereby increasing the expense) and in bad years underestimate the allowance account (increasing earnings).
b.
GAAP does not allow for earnings management.
c.
In good years Taylor may be conservative and over-estimate the allowance account (thereby decreasing the expense) and in bad years underestimate the allowance account (decreasing earnings).
d.
The SEC forbids companies from managing earnings.

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