Under the Direct Write-Off Method of Accounting for Uncollectible Accounts

question 124

Multiple Choice

Under the direct write-off method of accounting for uncollectible accounts,

• A)the allowance account is increased for the actual amount of bad debt at the time of write-off.
• B)a specific account receivable is decreased for the actual amount of bad debt expense at the time of write-off.
• C)balance sheet relationships are emphasized.
• D)bad debt expense is always recorded in the period in which the revenue was recorded.

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Definitions:

Straight-Line Amortization

A method of systematically reducing a loan or the cost of an intangible asset over a fixed period, where equal amounts are expensed in each period.

Semiannual

Occurring twice a year; a term often used in finance to describe payments, interest accruals, or other events that happen every six months.

Unamortized Discount

The portion of a bond discount that has yet to be expensed in the income statement over the bond's life.

Gain

Refers to the profit earned from the sale of an asset or investment for more than its purchase cost, excluding income from the primary business activities.