Which of the Following Is Correct When Bad Debt Expense

question 106

Multiple Choice

Which of the following is correct when bad debt expense is recorded at year-end?

• A)Current assets will increase.
• B)Gross profit will decrease.
• C)Income from operations will decrease.
• D)Current liabilities will decrease.

---

Definitions:

Expected Inflation

The rate at which it is forecasted that the general level of prices for goods and services will rise over a period of time.

Nominal Rate

The interest rate before adjustments for inflation, indicating the gross rate of return on an investment.

Holding-Period Return

The total return received from holding an asset or portfolio over a specified period, accounting for all income and capital gains.

Dividend

A portion of a company's earnings distributed to its shareholders, usually in the form of cash payments or additional shares.