A Company Has Significant Uncollectible Receivables

question 88

Multiple Choice

A company has significant uncollectible receivables.Why is the direct write-off method unacceptable?

• A) Assets will be understated 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.

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Definitions:

Colon Cancer

A type of cancer that begins in the large intestine (colon), which is the final part of the digestive tract.

Colostomy

A surgical procedure that creates an opening (stoma) from the colon to the surface of the abdomen to eliminate waste.

Peristalsis

The involuntary contractions and relaxations of the muscles in the digestive tract, which move contents through the system.

Jejunum

The middle section of the small intestine between the duodenum and ileum, where most of the nutrients from food are absorbed.