Recording the estimate of bad debt expense:
A)increases assets.
B)increases net income.
C)is done at the same time the credit sale is recorded.
D)follows the expense recognition ("matching")principle.

Question

Quizplus · Accepted Answer

Recording an estimate of Bad Debt Expense match the cost of bad debts to the accounting period in which the related credit sales are made.The related adjusting entry increases the Allowance for Doubtful Accounts account,a contra-asset,and increases Bad Debt Expense,and expense account.As a result,it decreases total assets and net income.The entry is recorded at the same time as the other adjusting entries at the end of the accounting period.

Recording the Estimate of Bad Debt Expense