Which of the following best describes the proper treatment for uncollectible amounts of revenue?

The proper treatment for uncollectible amounts of revenue is best captured by the concept of recognizing bad debt expense, which is essential for accurately reflecting the financial position of an entity. Reporting bad debt expense allows for a more realistic view of the revenues that are expected to be collected.

When a company recognizes bad debt, it accounts for the expected losses from uncollectible accounts, which means that the revenue should be reported net of these expected uncollectibles. This method aligns with the accrual basis of accounting, which states that revenues should be recognized when earned, but they should also be adjusted for expected losses to provide a true representation of net realizable revenue.

Deferred revenue, on the other hand, relates to cash received before products are delivered or services are rendered, making this option irrelevant to the treatment of uncollectible amounts specifically. In contrast, reporting bad debt expenditure is not a standard terminology used in accounting practices; rather, the appropriate term is bad debt expense. Therefore, the most accurate approach aligns with the recognition of bad debt expense, ensuring financial statements reflect anticipated losses in receivables accurately.