Which Principle of Accounting Prescribes the Use of the Allowance

question 51

Multiple Choice

Which principle of accounting prescribes the use of the allowance method of accounting for bad debts?

• A) full disclosure principle
• B) historical cost principle
• C) revenue recognition principle
• D) matching principle

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Definitions:

Corporate Profits Tax

A tax imposed on the profits earned by corporations, factoring in their revenue minus expenses and deductions.

National Debt

The total amount of money that a country's government has borrowed through issuing securities and not yet repaid, often as a result of spending more than it receives in taxes.

Budget Balancing

The process of adjusting government spending and revenue to ensure that the budget is not in deficit, aiming for a balanced budget.

Federal Budget

An itemized plan for the annual public expenditures of the United States, detailing government spending and revenue.