The use of the bad debt and allowance accounts is required under which accounting concept?
A) The revenue recognition principle
B) The matching principle
C) The materiality principle
D) The monetary unit principle
E) Cost principle

Question

Quizplus · Accepted Answer

The use of bad debt and allowance accounts is required under the matching principle, which requires expenses to be recorded in the same period as the revenue they help to generate. The bad debt and allowance accounts allow for an estimate of the amount of revenue that may not be collected, which is considered an expense and is therefore matched with the revenue in the same period.

The Use of the Bad Debt and Allowance Accounts Is