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marysya [2.9K]
3 years ago
6

A firm engages in a new type of financial transaction that has a material effect on its earnings. An analyst should most likely

be suspicious of the new transaction if: no accounting standard exists that applies to the transaction. management has not explained its business purpose. the transaction is not governed by existing regulations.
Business
1 answer:
slega [8]3 years ago
4 0

Answer:

management has not explained its business purpose

Explanation:

Since in the question it is mentioned that the firm is engaged in the new financial transaction that contains the material impact on the earnings so this represents that it could be come under the pre existed accounting standards.

Also everyone should be aware of the business purpose plus it is not established for changing off the financial statements

So it would be suspicious because the purpose of the business could not be explained

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Answer:

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Explanation:

When the management expects that it will not be able to collect a certain amount of receivable, it records Bad Debts in the Profit or Loss and a Credit entry to it is charged to contra-asset account known as "Allowance for Doubtful Accounts". It should be kept in mind that, at this stage it is only the expectation of management that the receivable from customers will not be collected. When the management is certain about the default of customer, it write-offs the Receivables. This is done by debiting Allowance for Doubtful Account and crediting Accounts Receivables. Write-off has no impact on the Net Realizable Value (Accounts Receivables - Allowance for Doubtful Account).

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3 years ago
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faust18 [17]

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<h3>What is Proximal Goal?</h3>

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