The Advantage of Relating a Company's Bad Debt Expense to Its

question 94

Multiple Choice

The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

• A) gives a reasonably correct valuation of the receivables in the statement of financial position.
• B) best relates bad debts expense to the period of sale.
• C) is the only generally accepted method for valuing accounts receivable.
• D) makes estimates of uncollectible accounts unnecessary.

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Definitions:

Disciplinary Sanction

Punishments or measures imposed by a professional organization or regulatory authority to correct misconduct or enforce standards.

Disbarment

A severe disciplinary sanction in which an attorney's license to practice law in the state is revoked because of unethical or illegal conduct.

Suspension

A serious disciplinary sanction in which an attorney who has violated an ethical rule or a law is prohibited from practicing law in the state for a specified or an indefinite period of time.

Mildest Sanction

The least severe form of penalty or disciplinary action imposed in response to a wrongdoing or offense.