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?? 3696 Lt ? smart2.ums.edu.my LEARNING MANAGEMENT SYSTEM MOOC Fakulti Perniagaan, Ekonomi dan PerakaunanBT12203 [2-2017/2018] QUIZ 2 BT12203 (ulangan) Question 10 Not yet answered Marked out of 1.00 P Flag question 18. C3.The matching principle prescribes: Select one: for a. The use of the allowance method of accounting for bad debts b. That bad debts not be written off c. That bad debts be disclosed in the financial statements. d. The use of the direct write-off method for bad debts. e. That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions. ess Next ??

Explanation / Answer

According to matching principle of accounting, the income of an entity can be accurately determined for a period, the total expenses incurred during the period required for earning the revenue of the period should be deducted from the revenue.

In other words expenses for a period incurred to earn revenue needs to be matched with the revenue of the period to determine the income.

Bad debts are expenses for a period and according to matching principle, these need to be deducted from the revenue of the period.

Since bad debt for a period may not be accurately known at the time of preparing financial statement, the amount should be estimated and as per matching principle,provision for the same should be made.

Hence, The matching principle prescribes:

Answer:

The use of the allowance method of accounting for bad debt.

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