The Expense Recognition (Matching) Principle Permits the Use of the Direct

question 51

True/False

The expense recognition (matching) principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.

---

Definitions:

Short-term Loss

A financial loss realized on the sale or exchange of an asset held for one year or less.

Accumulated Straight-line Depreciation

The total amount of depreciation expense that has been recorded for an asset to date, using the straight-line method of depreciation.

Tax Bracket

A range of incomes taxed at a particular rate under a progressive tax system.

Capital Asset

An asset held by an individual or business for investment or personal purposes, excluding inventory or assets sold in the ordinary course of a business.