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The year-end adjusting entry to record bad debt expense will increase which of the following ratios?
A) Current.
B) Quality of income.
C) Quick.
D) Net profit margin.
Bad Debt Expense
The cost associated with accounts receivable that is not expected to be collected.
Quality of Income
A measure of the conservatism of a company's earnings with respect to its ability to generate cash flows, indicating the robustness of earnings.
Net Profit Margin
A financial performance ratio, expressed as a percentage, calculating the amount of net income generated as a portion of revenues.
- Investigate the influence of distinct transactions on financial ratios and a corporation's financial status.
- Gain insight into how financial statement modifications, like depreciation and bad debt expense, affect financial ratios.
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Learning Objectives
- Investigate the influence of distinct transactions on financial ratios and a corporation's financial status.
- Gain insight into how financial statement modifications, like depreciation and bad debt expense, affect financial ratios.
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