Question

Multiple Select Question Select all that apply Bad Debt Expense ______. (Check all that apply.) Multiple select question. should exceed the revenue generated from incurring the cost is a cost of extending credit to customers is based on actual events and does not require estimation is an estimate

Answer 1

Bad Debt Expense is a cost of extending credit to customers is based on actual events and does not require estimation is an estimate.

• When a receivable is no longer recoverable as a result of a customer's inability to pay an outstanding debt owing to bankruptcy or other financial issues, a bad debt expense is recorded.
• Big Store stops paying its debts and fails to reimburse Company XYZ for goods valued at $100,000. Company labels the $100,000 as a bad debt because it has little faith that Big Store will ever make good on its obligations.
• When a customer's repayment of previously granted credit is thought to be uncollectible and is therefore recorded as a charge off, a business incurs a bad debt expense.
• Bad debt charges are categorized as operating costs and are typically listed under selling, general, and administrative costs on your company's income statement.

Thus this is the answer.

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