Asked by Samantha DiJohn on Jun 20, 2024
Verified
What are the two different methods for accounting for bad debts:
A) Direct Write-off method and Allowance method
B) Accounts Receivable method and Direct Write-off method
C) Accounts Receivable Reconciliation method and Allowance method
D) Direct Write-off method and Accounts Receivable Reconciliation method
Direct Write-off Method
A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account when they are determined to be uncollectible.
Allowance Method
An accounting technique used to estimate uncollectible accounts receivable and record them as an expense.
Bad Debts
Money owed to a company that is considered irrecoverable and is written off as a loss.
- Identify the techniques for calculating the expense of uncollectible accounts through the Allowance approach.
- Distinguish between the Allowance method and the Direct-Write-Off method in accounting for uncollectible accounts.
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Learning Objectives
- Identify the techniques for calculating the expense of uncollectible accounts through the Allowance approach.
- Distinguish between the Allowance method and the Direct-Write-Off method in accounting for uncollectible accounts.
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