When Is It Acceptable to Use the Direct Writeoff Method

question 58

Multiple Choice

When is it acceptable to use the direct writeoff method to account for uncollectible accounts?

• A)when the expected bad debts are significant
• B)when the company has historical data in regards to uncollectible accounts
• C)when the company uses the percentage of sales method
• D)when the expected bad debts are not significant

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Definitions:

Price of A

Represents the amount of money required to purchase a specific item or service A.

Price of B

The cost or value assigned to good or service B in the market.

Equal Satisfaction

A situation or outcome in consumer behavior where an individual achieves the same level of utility or happiness from different combinations of goods or services.