The expense recognition (matching) principle, as applied to bad
debts, requires:
Multiple Choice
a)That expenses be ignored if their effect on the financial
statements is unimportant to users' business decisions.
b)The use of the direct write-off method for bad debts.
c)The use of the allowance method of accounting for bad
debts.
d)That bad debts be disclosed in the financial statements.
e)That bad debts not be written off.
Answer
|
The expense recognition (matching) principle, as applied to bad debts, requires the use of the allowance method of accounting for bad debts. |
|
The use of the allowance method of accounting for bad debts ensures bad debts expense is matched with revenue for the period. |
| Option C is correct |