If a company fails to record estimated bad debts expense, then
A)the carrying amount is understated.
B)expenses are understated.
C)revenues are understated.
D)receivables are understated.

Question

Quizplus · Accepted Answer

Failing to record estimated bad debts expense results in an understatement of expenses because the expense associated with potential credit losses is not recognized. This does not directly affect the carrying amount, revenues, or the understatement of receivables.

If a Company Fails to Record Estimated Bad Debts Expense