What Is the Effect of Bad Debts on Revenue Recognition

question 204

Multiple Choice

What is the effect of bad debts on revenue recognition under the proposed ASU?

• A)Bad debts are recognized as an extraordinary item.
• B)Bad debts must be estimable in order to recognize revenue.
• C)Bad debts are deducted from revenue to calculate net revenue on the income statement, similar to sales returns.
• D)Bad debts are an expense.

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