Most companies that sell goods on credit recognize the related revenue even though there is a chance some customers may not pay in full.What allows them to do that?

Question

Quizplus · Accepted Answer

Companies can recognize revenue from credit sales while accounting for the possibility of non-payment by estimating and recording an expense for the expected amount of bad debt. This aligns with the allowance method for accounting for bad debts, ensuring that revenues and related expenses are matched in the same period the revenue is recognized.

Most Companies That Sell Goods on Credit Recognize the Related