A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that

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Basing bad debt expense solely on historical relationships does not take into account changes in the current economic environment, customer creditworthiness, or other factors that may impact the collectibility of accounts receivable. As a result, bad debt expense may not accurately match with current revenues, which could lead to distortions in the company's financial statements.

A Disadvantage of Basing Bad Debt Expense on the Historical