The ________________ Method of Accounting for Bad Debts Records the Loss

question 70

Short Answer

The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible.

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Definitions:

Gross Accounts Receivable

The total amount owed to a company by its customers for goods or services delivered on credit before any deductions for returns or bad debts.

Bad Debts Expense

The cost associated with accounts receivable that are not expected to be collected.

Contra Asset

An asset account where its balance is opposite of the normal balance, used to offset the balance of a related account, such as allowance for doubtful accounts offsetting accounts receivable.

Expense

An outflow of money to another person or company to pay for an item or service, or for a cost required to operate a business.