Accounting for Bad Debts: The Impact on Credit Policy and

THEBIGP ICTURE 14 R emember back in Chapter 5 where you learnedabout closing the books? Pretty boring andtedious, right? But necessary all the same—or is it?Canadian accounting software innovatorQ.W. Page Associates doesn't think so, and has aTechnical Award of Excellence fromPC Magazineto back it up.Its accounting software, NewViews, has becomesomething of a legend because it broke so manyrules when it first hit the market. NewViews wasdesigned to combine in a single package a lot of thefeatures formerly available only in a spreadsheet (think Excel) or a database (think Access).Combining these features into what was already anexcellent accounting software solution is whatearned the company its major award.How does this relate to not closing the books?The closing process is the accountant's answer toseparating a business's lifetime of transactions intoyearly "volumes," so that, for example, annual income statements can easily be produced. What Q.W. Page realized is that so long as you are careful to date each transaction correctly, the computer itself can generate annual financial statements with a minimum of fuss and bother. So why close the books at all? You can well imagine the reaction of professional accountants everywhere when an upstart small company from Aurora, Ontario, dared to suggest that 500 years of accounting history and practice was no longer needed! Despite a lot of skepticism, the prod- uct took hold, and it is used today by companies all over the world, and not just small ones. Customers really like the flexibility in reporting that the product offers, as well as its leading-edge innovation. One thing NewViews handles with comparative ease is recognizing situations in which one or more customers cannot pay what they owe. While unpleas- ant, this is a business reality and needs to be handled properly and efficiently. This chapter will provide details so that when you are faced with the need to record such events, you will find it easy to do. Read on. Source:Q.W. Page Associates Inc. website, www.qwpage.com, accessed September 14, 2007, and June 4, 2010; personal knowledge and training in NewViews of the Canadian author of this book