The failure to match Bad Debt Expense with Sales Revenue in the same period will lead to the distorted views of Net Income:

Question

Quizplus · Accepted Answer

Matching Bad Debt Expense with Sales Revenue in the same period is crucial for accurate financial reporting. If this matching does not occur, it distorts the view of Net Income both in the period of the sale (because expenses are not properly matched with the revenues they helped generate) and in the period the bad debt is discovered (because the expense will appear in a different period than the revenue, affecting the accuracy of financial results in both periods).

The Failure to Match Bad Debt Expense with Sales Revenue