Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 23 - No. 14)
Which of the following is true when using the allowance method for bad debts?
Bad debt expense is recognized in the period the sale occurs.
Bad debt expense is recognized when a specific account is deemed uncollectible.
The provision for doubtful debts is increased at the end of each accounting period.
Accounts receivable are written off directly against bad debt expense.
Explanation
The allowance method matches the bad debt expense to the period of sale and creates a provision.
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