The Direct Write-Off Method of Accounting for Bad Debts

question 206

Multiple Choice

The direct write-off method of accounting for bad debts

• A) uses an allowance account.
• B) uses a contra-asset account.
• C) does not require estimates of bad debt losses.
• D) is the preferred method under generally accepted accounting principles.

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Definitions:

Pairs

A term that can refer to two related or matched items or elements, commonly used in various contexts.

Cost Curve

is a graphical representation of how the cost of producing varies with different levels of output, typically including curves like average cost and marginal cost.

Output

The quantity of goods or services produced by a firm or industry.

Short Run

A period in economics during which at least one factor of production is fixed, constraining the firm's capacity to adjust to changes in demand or supply.