Under the allowance method,Bad Debt Expense is recorded:
A)as an estimate.
B)when an individual account is written off.
C)several times during the year as needed.
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

The allowance method involves estimating the amount of bad debt that is likely to be incurred during the year and recording it as an expense. This estimate is based on historical experience, current economic conditions, and other relevant factors. It is not based on the actual write-off of individual accounts, although those write-offs will ultimately affect the amount of the allowance and the corresponding expense. The estimate may be revised several times during the year as needed based on new information or changing circumstances.

Under the Allowance Method,Bad Debt Expense Is Recorded