An adjustment to the financial statements to reflect customers who are unlikely to pay the amounts they owe would be shown in the financial statements as:
A) Expense and provision
B) Expense and accrual
C) Income and prepayment
D) Income and provision

Question

Quizplus · Accepted Answer

An adjustment for customers who are unlikely to pay is recognized as an expense (bad debt expense) and a provision (allowance for doubtful accounts) in the financial statements. This reflects the expected loss from receivables that are not expected to be collected.

An Adjustment to the Financial Statements to Reflect Customers Who