In accounting for health care entities,the provision for bad debt should always be recorded as a revenue deduction,rather than as an expense.

Question

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The FASB standards provide that the provision for bad debts be reported as an expense and not as a deduction from gross revenue in arriving at net patient revenue; however, public health care entities that follow business-type accounting practices follow GASB standards applicable to proprietary funds. Those standards require that the provision for bad debt be netted against revenues, rather than reported as an expense.

In Accounting for Health Care Entities,the Provision for Bad Debt