What is the treatment of accounts receivable and bad debts, and how do they impact the Business Activity Statement (BAS)?

Question

Accepted Answer

Accounts receivable are recorded as assets on the balance sheet, while bad debts are written off as expenses. Both impact the BAS.

Accounts receivable represent money owed to the business by customers for goods or services provided.
Bad debts are debts that are unlikely to be collected and are written off as expenses on the income statement.
The treatment of accounts receivable and bad debts can impact the Business Activity Statement (BAS) by affecting the reported revenue and expenses of the business.
Accounts receivable are recorded as assets on the balance sheet, while bad debts are written off as expenses, which can impact the profitability and financial position of the business.
For example, if a business has a high level of bad debts, it may need to adjust its revenue and expenses on the BAS, which can impact the amount of tax owed.