The Materiality Principle Permits the Use of the Direct Write-Off

question 155

True/False

The materiality principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in comparison to the company's other financial statement items such as sales and net income.

---

Definitions:

Switching Costs

The expenses or inconveniences that customers incur as a result of changing from one product, service, supplier, or system to another.

Import-Export Firewalls

Security systems that monitor and control incoming and outgoing network traffic based on predetermined security rules, especially between different trust levels or network zones.

Preemptive Practices

Strategic actions taken by businesses to anticipate and address potential challenges, obstacles, or market changes before they occur, often to maintain competitive advantage.

Gross Domestic Product

The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period, serving as a broad measure of a nation's overall economic activity.