This year Ace Electronics tried calculating its bad debts expense two different ways.Using a percentage of credit sales,bad debts expense would be $1,500.Based on an aging of accounts receivable,however,bad debts expense would be only $1,200.If Ace decides to report $1,500 of bad debts expense,this accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

Choosing the higher bad debts expense ($1,500) is considered conservative because it results in lower net income and a more cautious approach to recognizing potential losses.

This Year Ace Electronics Tried Calculating Its Bad Debts Expense