For a Company with Significant Uncollectible Receivables, the Direct Write-Off

question 111

Multiple Choice

For a company with significant uncollectible receivables, the direct write-off method is unsuitable because:

• A)it overstates liabilities on the balance sheet.
• B)it violates the matching principle.
• C)direct write-offs would be immaterial.
• D)it is not allowed for tax reasons.

Apply the expense recognition principle in the context of accounting for bad debts.

Recognize the materiality constraint and its application in financial accounting.

Understand the principles of internal control and their importance.

Recognize different forms of cash and cash equivalents.

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Definitions:

Snowmelt

The process where accumulated snow and ice start to melt, turning into water, often significant in the understanding of flood risks and water supply.

Soluble Materials

Substances that can be dissolved in a solvent to form a solution.

Dissolution

The process by which a substance is dissolved by a solvent, resulting in a solution, especially referring to minerals in rocks by water.

Transported

Refers to materials or sediment that have been moved and deposited in a new location by natural processes.