The Direct Write-Off Method for Uncollectible Accounts

question 118

Multiple Choice

The direct write-off method for uncollectible accounts:

• A)ignores the matching principle.
• B)is an acceptable alternative method of recognizing bad debt expense under GAAP.
• C)results in higher bad debt expense for most companies.
• D)may only be used by companies that do not extend credit to their customers.

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Definitions:

Accounts

Financial records that track the transactions and balances of specific assets, liabilities, revenues, or expenses.

Balances

The amounts of money recorded in financial accounts, reflecting the difference between credits and debits.

Reported

Information or data that has been formally communicated or disclosed, often referring to financial performance or events.