Q191
A recovery of bad debt
A.
increases net income
AnswerB.
decreases net income
C.
increases gross profit
D.
increases gross profit and net income
Answer: Option A
Solution
Answer: Option A
Solution:
A recovery of bad debt increases net income. Bad debt recovery is a payment received for a debt that was written off and considered uncollectible. The receivable may come in the form of a loan, credit line, or any other accounts receivable. Because it generally generates a loss when it is written off, bad debt recovery usually produces income.