Bad debts expense is ordinarily tested as part of the testing of the valuation of:
A) trade payables.
B) trade receivables.
C) cash at bank.
D) inventory.

Question

Quizplus · Accepted Answer

Bad debts expense is related to trade receivables, as it represents the amount of receivables that are expected to be uncollectible. Therefore, it is necessary to test the valuation of trade receivables to determine the adequacy of the allowance for bad debts and the amount of the bad debts expense.

Bad Debts Expense Is Ordinarily Tested as Part of the Testing