An accounting issue for accounts receivable is the timing of recognition of the reduction in income caused by the uncollectibility of some accounts.With regard to timing, both U.S.GAAP and IFRS require that a seller recognize an expense for estimated uncollectible accounts receivable in the _____.
A)period when it recognizes the accounts receivable is uncollectable
B)period after it recognizes the related revenue
C)same period when it recognizes the related revenue
D)period before it recognizes the related revenue
E)period after it recognizes the accounts receivable is uncollectable

Question

Quizplus · Accepted Answer

Both U.S. GAAP and IFRS require that a seller recognize an expense for estimated uncollectible accounts receivable in the same period when it recognizes the related revenue. This is known as the matching principle, which requires expenses to be recognized in the same period as the related revenue to accurately reflect the financial performance of the company.

An Accounting Issue for Accounts Receivable Is the Timing of Recognition