Under the Direct Method, Bad Debt Expense Is Ignored Because

question 89

True/False

Under the direct method, bad debt expense is ignored because it is a noncash expense.

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Definitions:

Owner's Equity

The residual interest in the assets of an entity that remains after deducting its liabilities; also known as shareholders' equity for corporations.

Revenues

Income earned by a company from its business activities; essentially the gross income figure from which costs are subtracted to determine net income.

Expenses

Expenses or the spending of resources or taking on of liabilities over time due to the delivery or production of goods, provision of services, or other actions that are central to the entity's primary operations.

Utility Expense

Costs incurred by a business or individual for utilities such as electricity, water, and gas.