Bad Debts Expense is reported on the income statement as
A) part of cost of goods sold.
B) reducing gross profit.
C) an operating expense.
D) a contra-revenue account.

Question

Quizplus · Accepted Answer

Bad Debts Expense is an expense related to the operation of the business and is reported as an operating expense on the income statement. It represents the cost of providing goods or services that customers did not pay for, and therefore is not directly related to cost of goods sold or reducing gross profit. It is also not a contra-revenue account as it is not directly related to sales revenue.

Bad Debts Expense Is Reported on the Income Statement as