The Direct Write Off Method Is Generally Not Allowed Under

question 30

True/False

The direct write off method is generally not allowed under GAAP because management selects the period of write off thus allowing earnings management. Where as an estimation of uncollectible accounts an entry is necessary each period to accurately match revenues and expenses.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed on earned income, investments, or properties.

Buyer Surplus

The difference between the buyer’s value (what he is willing to pay) and the price (what he has to pay).

Seller Surplus

The difference between price (what the seller is able to sell for) and the seller’s value (what she is willing to sell for).

Individual's Value

The worth or significance of a person, often considered in terms of their qualities, actions, and contributions to society.