The Two Methods of Accounting for Bad Debts Are the Direct

question 38

Multiple Choice

The two methods of accounting for bad debts are the direct write-off method and the allowance method. When comparing the two, which of the following is true?

• A) The direct write-off method is exact and also better illustrates the matching principle
• B) The allowance method is less exact but it better illustrates the matching principle
• C) The direct write-off method is theoretically superior
• D) The direct write-off method requires two separate entries to write off an uncollectible account

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Definitions:

Figurative Analogies

Comparisons that draw relationships between two different things based on resemblance in some aspects, often used to explain complex ideas or emotions.

Behavioral Response

The observable reaction or action of an individual following a stimulus or in a particular situation.

Verbal Response

A spoken or written reply or reaction to a question, statement, or situation.

Nonverbal Response

Communication without words, using gestures, facial expressions, and body language to convey a message or reaction.