Bad Debt Expense is considered
A) an avoidable cost in doing business on a credit basis.
B) an internal control weakness.
C) a necessary risk of doing business on a credit basis.
D) avoidable unless there is a recession.

Question

Quizplus · Accepted Answer

Bad Debt Expense is a necessary risk of doing business on a credit basis because it represents the amount the company expects to lose in uncollectible accounts. While internal controls can help minimize bad debts, it is not considered an avoidable cost since it is an inherent risk in extending credit to customers. Additionally, the occurrence of a recession may increase the likelihood of bad debts, but it does not make it avoidable.

Bad Debt Expense Is Considered