The matching principle requires that bad debts be treated as an expense in the year
A)the sale is made.
B)the customer files bankruptcy.
C)in which the debt becomes six months past due.
D)a court declares it to be uncollectible.

Question

Quizplus · Accepted Answer

The matching principle in accounting states that expenses should be recorded in the period in which the related revenues are earned. Therefore, bad debts should be treated as an expense in the year the sale is made, as this is when the revenue was earned and the potential for bad debt was created.

The Matching Principle Requires That Bad Debts Be Treated as an Expense