Under the allowance method for uncollectible accounts, Bad Debts Expense is recorded
A)when an individual account is written off.
B)when the amount of loss is known.
C)for an amount that the company estimates as uncollectible.
D)several times during the accounting period.

Question

Quizplus · Accepted Answer

The allowance method involves estimating the amount of accounts receivable that may not be collected in the future and recording it as Bad Debts Expense in the period the revenues are recognized, not when the specific account is written off or the exact amount of loss is known. This approach matches expenses with revenues in the period they are incurred, adhering to the matching principle in accounting.

Under the Allowance Method for Uncollectible Accounts, Bad Debts Expense