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These information will be useful for deciding where debtors will our debt or not. It will also be useful for knowing capability to pay the debt. If company sells the goods on credit to particular debtor, then at what level it will be sold after seeing his position. For this manager can fix the standard for providing goods on credit. If a particular debtor is below than given standard, then he should not accept his proposal of buying goods on credit. Formulation Collection Policy. For getting fund fastly from debtor, the following steps will be taken under formulation of collection policy. Send reminding letter for paying debtb) Take the help of debt collection agency for getting bad debt. To do legal action against bad debtors. To request personally to debtor to pay his dues on mobile or email. Finance manager should monitor collection position through average collection period from past sundry debtor and their turnover ratio. To make ageing schedule. Sample of Ageing schedule is given below. What is GAAP (generally accepted accounting principles)? GAAP (generally accepted accounting principles) is a collection of commonly- followed accounting rules and standards for financial reporting. The acronym is pronounced . The purpose of GAAP is to ensure that financial reporting is transparent and consistent from one organization to another. There is no universal GAAP standard and the specifics vary from one geographic location or industry to another. In the United States, the Securities and Exchange Commission (SEC) mandates that financial reports adhere to GAAP requirements. The Financial Accounting Standards Board (FASB) stipulates GAAP overall and the Governmental Accounting Standards Board (GASB) stipulates GAAP for state and local government. Publicly traded companies must comply with both SEC and GAAP requirements. Many countries around the world have adopted the International Financial Reporting Standards (IFRS). 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