The Direct Write-Off Method for Bad Debts

question 18

Multiple Choice

The Direct Write-off Method for bad debts:

• A)Complies with GAAP
• B)Removes a customer's uncollectible account receivable and records a bad debt expense and is recorded at the time a specific customer's account becomes uncollectible
• C)Estimates bad debt expense and establishes an allowance or reserve for uncollectible
• D)None of the choices are correct

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Definitions:

LIFO

An accounting methodology where the most recently produced or acquired inventory items are recorded as sold first.

Physical Flow

The movement and management of materials and products from procurement through production and delivery to customers.

Inventory

The goods and materials that a business holds for the ultimate goal of resale, representing one of the most important assets for companies dealing with physical products.