Computing Bad Debt Expense by Estimating the Net Realizable Value

question 92

Multiple Choice

Computing bad debt expense by estimating the net realizable value of accounts receivable (ageing approach) :

• A) Emphasizes the income statement rather than the balance sheet.
• B) Causes an adjustment to the allowance account, which produces a balance in the account equal to the total estimated uncollectible amount.
• C) Produces a bad debt expense amount that is close to uncollectible current credit sales.
• D) Is based primarily on the cost principle.

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