Using an allowance method of accounting to recognize uncollectible accounts receivable is an application of which accounting convention?
A)revenue recognition
B)historical cost
C)matching principle
D)period of time

Question

Quizplus · Accepted Answer

The matching principle states that expenses should be recognized in the same period as the revenue they help to generate. In the case of uncollectible accounts receivable, the allowance method allows for the recognition of estimated bad debts as an expense in the same period as the revenue was recognized. This application of the matching principle helps to provide a more accurate representation of net income for the period.

Using an Allowance Method of Accounting to Recognize Uncollectible Accounts