This year Beta Business tried calculating its bad debts expense two different ways.Using a percentage of credit sales,bad debts expense would be $2,500.Based on an aging of accounts receivable,however,bad debts expense would be $2,750.If Beta Business decides to report $2,750 of bad debts expense,this accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

Choosing the higher estimate for bad debts expense ($2,750) is considered conservative because it presents a more cautious view of the company's financial health by recognizing potential losses sooner rather than later.

This Year Beta Business Tried Calculating Its Bad Debts Expense