What question did this study set out to answer?

The aim is to assess whether bad debts should be excluded from the calculation of periodic earnings based on their causal relationship with net asset inflows.

March 18, 2026The Accounting Review

Bad Debts: Take Two: A Comment.

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ESEdward Ray Scott

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Implication

This commentary examines the exclusion of bad debts from periodic earnings, suggesting a reconsideration of their impact on revenue calculation.

Key Points

The aim is to assess whether bad debts should be excluded from the calculation of periodic earnings based on their causal relationship with net asset inflows.
Analyzed arguments regarding bad debts as uncollectible accounts
Evaluated the causal linkage between revenues and expenses on the income statement
Considered management's role in anticipating bad debts
Argued that bad debts are not homogeneous with other expenses of the income statement
Suggested that bad debts should be considered adjustments to the revenue stream
Concluded that a causality criterion is essential for evaluating operating income

Cite This Study

Edward Ray Scott (1973) studied this question.

synapsesocial.com/papers/69ba432b4e9516ffd37a416d https://doi.org/10.2308/tar-4482555

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Implication

This commentary examines the exclusion of bad debts from periodic earnings, suggesting a reconsideration of their impact on revenue calculation.

Bad Debts: Take Two: A Comment.

Discussion

Member takes

Implication

Key Points

Cite This Study

Bad Debts: Take Two: A Comment.

Discussion

Member takes

Implication

Key Points

Cite This Study

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