Asked by sujana dontukurthy on Jul 21, 2024
Verified
When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method
A) uses a percentage of sales method to estimate uncollectible accounts
B) is used primarily by large companies with many receivables
C) is used primarily by small companies with few receivables
D) uses an allowance account
Direct Write-off Method
An accounting method where uncollectible debts are charged directly to expense as they are deemed to be uncollectible, not matching expenses to related revenues.
Allowance Method
An accounting technique that estimates and accounts for bad debts or credit losses in financial statements.
Uncollectible Receivables
Accounts receivable that a company does not expect to collect and writes off as a loss.
- Identify the differences between the allowance method and the direct write-off method when accounting for bad debts.
Verified Answer
Learning Objectives
- Identify the differences between the allowance method and the direct write-off method when accounting for bad debts.
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