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

If a company fails to record estimated bad debts expense, expenses are understated because the bad debts expense is not recognized, leading to an overstatement of net income.

If a Company Fails to Record Estimated Bad Debts Expense