Q9RQ - Horngren'S Financial And Managerial Accounting

Question

What is the expense account associated with the cost of uncollectible receivables called?

Step-by-Step Solution

Answer

Answer

Bad debt expense is the expense account associated with the cost of uncollectible receivables.

Step 1: Definition of Accounts Receivables

The accounts receivables refer to the amount of sales for which payment is still due from the customer. It is considered a current asset of the business as the entity expects to receive it within one year.

Step 2: Expense account associated with the cost of uncollectible receivables

The business entity reports the bad debt expense account, which is associated with the cost of uncollectible receivables. Bad debt expenses include the receivables that a business entity expects to be uncollectible.