Failing to record bad debt expense in the same period as the related revenue violates which principle?
A)Expense recognition principle ("matching")
B)Revenue recognition principle
C)Lower-of-cost-or-market value principle
D)Cost principle

Question

Quizplus · Accepted Answer

To comply with the expense recognition ("matching")principle,a company needs to record bad debts in the same period as the sale.The only way to do this is to record an estimate of the amount of bad debts that are likely to arise.Later,the accounting records can be adjusted when uncollectible amounts become known with certainty.

Failing to Record Bad Debt Expense in the Same Period