Which of the Following Statements Is False Regarding the Different

question 125

Multiple Choice

Which of the following statements is false regarding the different bases used for the allowance method?

• A) Three bases are generally accepted, the percentage of sales, the percentage of receivables, and the direct write-off.
• B) Management can choose whichever basis it prefers.
• C) If management wishes to emphasize the cash realizable value of receivables it will select the percentage of receivables basis.
• D) The company must determine its past experience with bad debt losses regardless of which basis it selects.