If a Company Uses the Direct Write-Off Method of Accounting

question 133

Multiple Choice

If a company uses the direct write-off method of accounting for bad debts,

• A)it is applying the matching principle.
• B)it will record bad debts expense only when an account is determined to be uncollectible.
• C)it will reduce the Accounts Receivable account at the end of the accounting period for estimated uncollectible accounts.
• D)it will report accounts receivable on the balance sheet at their net realizable value.

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Definitions:

Utilities

Essential services provided to the public, including electricity, gas, water, and sewage services, often regulated due to their importance and natural monopoly characteristics.

Agriculture

The practice of cultivating the land, producing crops, and raising livestock for human consumption and use.

Allocatively Efficient

Allocative efficiency occurs when resources are distributed in a way that maximizes the net benefit to society.