Asked by abdualrahman alhajri on Jun 25, 2024
Verified
In the direct write-off method, writing off an account causes:
A) a decrease in expense and an increase in an asset.
B) an increase in expense and a decrease in an asset.
C) a decrease in the Allowance account and a decrease in expense.
D) an increase in Accounts Receivable and a decrease to revenue.
Direct Write-off Method
A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account at the time they are determined to be uncollectable.
Expense
Outflows or other using up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.
Asset
Resources owned by a company that are expected to provide future economic benefits, including tangible and intangible items like property, equipment, and trademarks.
- Outline the discrepancies between how the direct write-off and allowance methods handle accounts receivable deemed uncollectible.
- Indicate the financial documentation required for rescinding accounts receivable, garnering on accounts once rescinded, and the accounting treatment for doubtful debts expense and its recapture.
Verified Answer
Learning Objectives
- Outline the discrepancies between how the direct write-off and allowance methods handle accounts receivable deemed uncollectible.
- Indicate the financial documentation required for rescinding accounts receivable, garnering on accounts once rescinded, and the accounting treatment for doubtful debts expense and its recapture.
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