The Materiality Constraint,as Applied to Bad Debts

question 46

Multiple Choice

The materiality constraint,as applied to bad debts:

• A)Permits the use of the direct write-off method when bad debts expenses are relatively small.
• B)Requires use of the allowance method for bad debts.
• C)Requires use of the direct write-off method.
• D)Requires that bad debts not be written off.
• E)Requires that expenses be reported in the same period as the sales they helped produce.

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Definitions:

Social Decision Scheme

A model or strategy used within a group to aggregate individual preferences or opinions into a collective decision.

Groupthink

A psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms or societal standards.

Cognitive Dissonance

The psychological discomfort experienced when holding two or more conflicting cognitions (beliefs, attitudes, or values).