A Primary Disadvantage of the Allowance Method of Recording Bad

question 55

Multiple Choice

A primary disadvantage of the allowance method of recording bad debts, compared to the direct write-off method, is that:

• A) The allowance method gives a higher value of the company's accounts receivable asset.
• B) The allowance method requires estimation.
• C) The allowance method provides worse matching of revenues and expenses.
• D) The allowance method provides users with less relevant information.

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Definitions:

Distress

Emotional, mental, or physical strain or suffering that can negatively impact well-being.

Coping Strategy

Techniques or methods that individuals use to deal with stressful situations or emotions.

Emotion-Focused

A coping strategy in which individuals seek to manage their emotional response to a situation rather than trying to change the situation itself.

Efficiency-Focused

Aimed at achieving maximum productivity with minimum wasted effort or expense, often applied in work and energy utilization contexts.