The expense recognition principle
A)requires that all credit losses be recorded when an individual customer cannot pay.
B)necessitates the recording of an estimated amount for bad debts.
C)results in the recording of a known amount for bad debt losses.
D)is not involved in the decision of when to expense a credit loss.

Question

Quizplus · Accepted Answer

The expense recognition principle requires that expenses be matched with revenues in the period in which they are incurred. This necessitates estimating and recording bad debts in the same period as the related sales revenue.

The Expense Recognition Principle