Asked by Mackenzie Nelson on May 27, 2024
Verified
Which of the following contingencies is usually accrued?
A) risk of loss from fire
B) expected proceeds from insurance settlement
C) bad debts
D) discovery of possible mineral reserves on company property
Bad Debts
Unrecoverable amounts from debtors that are considered losses after all recovery attempts have been exhausted.
Insurance Settlement
The payment made by an insurance company to a policyholder following a claim, intended to cover losses or damages incurred.
- Determine and separate different types of contingencies and their respective treatment within financial records.
Verified Answer
SA
Shaikh AbdulaleemMay 27, 2024
Final Answer :
C
Explanation :
Bad debts are usually accrued because they are a foreseeable and estimable expense related to credit sales, recognized in accounting to match revenues with related expenses.
Learning Objectives
- Determine and separate different types of contingencies and their respective treatment within financial records.
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