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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Definitions:

Utilitarian Theory

A normative ethical theory suggesting that the best action is the one that maximizes utility, typically defined as that which produces the greatest well-being of the greatest number of people.

Moral Feelings

Emotions that guide or influence ethical judgments and decisions, such as guilt, shame, or empathy.

Ethical Dilemma

A challenging situation where a person is confronted with several right values or moral duties but can only choose one, leading to ethical conflict.

Utilitarian Perspective

A philosophical approach that assesses the moral worth of actions based on their outcomes, emphasizing the greatest good for the greatest number.