The Expense Recognition Principle

question 89

Multiple Choice

The expense recognition principle

• A)requires that all credit losses be recorded when an individual customer cannot pay.
• B)necessitates the recording of an estimated amount for bad debts.
• C)results in the recording of a known amount for bad debt losses.
• D)is not involved in the decision of when to expense a credit loss.

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Definitions:

Payrolls Tax

Payrolls Tax is a tax imposed on employers based on the salary and wages paid to employees, which can encompass federal, state, and local taxes.

Marital Status

A legal term that denotes whether a person is married, single, divorced, widowed, or separated.

Withholding Allowances

Exemptions claimed by an individual on a W-4 form to reduce the amount of income tax withheld from their paycheck.

Types Of Earnings

Types of earnings refer to the various measures of income a company generates, such as net income, operating income, and earnings before interest and taxes (EBIT).