D is corrent. According to the Auditing and Accounting Guide for Health Care Entities, charity care represents health care services that are provided but are never expected to result in cash flows. As a result, charity care does not qualify for recognition as receivables or revenue in the financial statements. Since charity care does not result in the recognition of receivables, there is no need to estimate uncollectible accounts. Accordingly, bad debts expense does not include an amount related to charity care.
A is incorrect because such services are not recorded as bad debts.
B is incorrect because charity care represents services that are provided.
C is incorrect because such services are not recorded as bad debts.
|
