Bad Debts Expense is reported on the income statement as
A)part of cost of goods sold.
B)an expense subtracted from gross sales to determine net sales.
C)an operating expense.
D)a non-operating expense.

Question

Quizplus · Accepted Answer

Bad Debts Expense is a type of operating expense as it is incurred in the normal course of business operations. It represents the cost of non-collectible accounts receivable and is reported on the income statement as a deduction from revenue to arrive at net income. It is not part of cost of goods sold nor a non-operating expense.

Bad Debts Expense Is Reported on the Income Statement as