[Anonymous]

if a client has all good customers who they believe will be able to pay their money due. Is a company still required to set up an allowance for doubtbfull accounts under GAAP? In which section could I find this answer?

[Anonymous]

The allowance for doubtful accounts is an estimate of funds that will not be received, so if a company has a reasonable basis for believing they will collect 100%, then no, they do not have recognize any.

However, unless 100% of your business is contracted with the government, I think any company will have a hard time justifying that they will collect every dollar.

[Anonymous]

Do you happen to know in which section I could find this information?

[Anonymous]

I don't know where in the authoritative literature it would be. I know the allowance for doubtful accounts is one way to fulfill the matching principal – matching expenses with revenues. And my remarks about it being unlikely that 100% of billings will be collected, those come from my work experience.

[Author]

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