Can a Company Use the Direct Write-Off Method Rather Than

question 42

Essay

Can a company use the direct write-off method rather than the allowance method to account for bad debts expense? Explain.

---

Definitions:

Direct Method

A cash flow statement preparation approach that shows the specific cash inflows and outflows associated with the operating activities.

Cash Received

The actual cash gathered by a company from its various activities, including sales, financing, or investing, during a particular period.

Noncash Investing

A financial activity that involves acquiring or disposing of assets without the immediate use of cash, such as through trading one asset for another or completing transactions through financing arrangements.

Fixed Assets

Long-term assets purchased for operating the business, not expected to be converted to cash within a year.