Question

Using Accounting Information Systems, assume you are developing a system for a manufacturing firm. Here is the problem: accountants see an increase in the number and dollar value of bad-debt write-offs. How do you plan to gain a thorough understanding of this problem?

Answer 1

Write-offs are something where we are unable to collect our receivables and removing them our balance sheet. This is a loss for the company and will reduce the net income. We have to understand the root cause of the problem. The reasons for this can be the products manufactured are not good, the debtors are given less credit terms, the creditworthiness of the debtors came down, overall economy not performing well. We have to take steps to reduce the write off and sell maximum amount of goods on cash basis