Bad Debts Expense is reported on the statement of income as
A)part of cost of goods sold.
B)an ammount equal to the allowance for doubtful accounts and presented on the statement of financial position.
C)an operating expense.
D)a non-operating expense.

Question

Quizplus · Accepted Answer

Bad Debts Expense is considered an operating expense because it is related to the normal operations of a business, specifically to the credit sales part of operations. It is not part of the cost of goods sold, nor is it equal to the allowance for doubtful accounts (which is a contra-asset on the balance sheet), and it is not classified as a non-operating expense since it directly relates to the core operations of selling goods or services on credit.

Bad Debts Expense Is Reported on the Statement of Income