Which of the following best describes the proper treatment for uncollectible amounts of taxes?
A) Report as bad debt expense.
B) Report as deferred inflows of resources.
C) Report as bad debt expenditures.
D) Report receivables net of uncollectible amounts.

Question

Quizplus · Accepted Answer

The proper treatment for uncollectible amounts of taxes is to report receivables net of uncollectible amounts, meaning that the uncollectible amounts should be deducted from the total amount of taxes owed. This is in accordance with the principle of conservatism, which requires that uncertainties and risks be understated rather than overstated. Reporting the uncollectible amounts as bad debt expense or bad debt expenditures is not appropriate, as taxes are not considered debts or expenses. Reporting the uncollectible amounts as deferred inflows of resources is not appropriate either, as this would overstate the amount of resources available to the government.

Which of the Following Best Describes the Proper Treatment for Uncollectible