When Comparing the Direct Write-Off Method and the Allowance Method

question 12

Multiple Choice

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method

• A) uses a percentage of sales to estimate uncollectible accounts
• B) is used primarily by large companies with many receivables
• C) is used primarily by small companies with few receivables
• D) uses an allowance account

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