The adjusting entry for bad debts expense affects __________.

Question

Quizplus · Accepted Answer

The adjusting entry for bad debts expense affects both the Income statement and the Balance sheet. This is because it reduces the amount of net income reported on the Income statement by recognizing an expense for the portion of accounts receivable that is expected to be uncollectible. At the same time, the entry also reduces the amount of accounts receivable reported on the Balance sheet, since it reflects the fact that not all of the accounts receivable will be collected.

The Adjusting Entry for Bad Debts Expense Affects __________