When using the allowance method for bad debts, how should bad debt expense be recorded?
A) As an adjusting entry at the end of the accounting period.
B) When a particular account is written off.
C) Whenever the allowance for doubtful accounts has a debit balance.
D) Whenever the allowance for doubtful accounts has a zero balance.

Question

Quizplus · Accepted Answer

The allowance method for bad debts involves estimating uncollectible accounts at the end of each accounting period and recording bad debt expense as an adjusting entry. This approach matches expenses with revenues in the period they are incurred, adhering to the matching principle of accounting.

When Using the Allowance Method for Bad Debts, How Should