If a company is overly optimistic about debt collection,the company will understate bad debt expense and:
A)overstate net income;and days to collect will decline.
B)overstate net income;but days to collect will increase.
C)understate net income;and days to collect will increase.
D)understate net income;and days to collect will decline.

Question

Quizplus · Accepted Answer

If bad debt expense is understated, net income is overstated because expenses are lower. Days to collect will increase as the company is not accurately reflecting the time it takes to collect receivables.

If a Company Is Overly Optimistic About Debt Collection,the Company