Elance Exams Answers PDF file

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How do you write off bad debt by using cash basis accounting?

Cash basis accounting does not recognize income until payment has been received. To have a bad debt expense you first have to recognize income. On cash basis accounting an invoice deemed as noncollectable is removed from your P&L by reducing gross income
Cash basis accounting recognizes income at the time an invoice is created and therefore when an invoice is deemed as noncollectable it is written off the books as a “bad debt expense”. The income may have been recognized in one year and written off as a b
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