Accrual accounting requires that the loss resulting from the failure of credit customers to pay their bills should be which of the following?
A)not be recorded until cash is collected from the customer in settlement of the account because that is the only sure event.
B)be estimated in the period in which sales are made but should not be recorded until the customer defaults because of the matching principle.
C)be estimated and recorded in the period in which sales are made so that periodic expenses are matched with periodic revenues.
D)be recognized in the period in which the trade receivable proves to be uncollectible because that is the only date when the loss will really be known.

Question

Quizplus · Accepted Answer

Accrual accounting requires that expenses should be matched with revenues in the period in which they occur. Therefore, the loss resulting from the failure of credit customers to pay their bills should be estimated and recorded in the period in which sales are made so that periodic expenses are matched with periodic revenues. This ensures that the income statement accurately reflects the results of operations for the period.

Accrual Accounting Requires That the Loss Resulting from the Failure