When Comparing the Direct Write-Off Method and the Allowance Method

question 60

Multiple Choice

When comparing the direct write-off method and the allowance method of accounting for uncollectible receivables, a major difference is that the direct write-off method

• A) uses a percentage of sales method to estimate uncollectible accounts.
• B) is used primarily by large companies with many receivables.
• C) is used primarily by small companies with few receivables.
• D) uses an allowance account.

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Definitions:

Family Unit

A social group in society typically consisting of parents and their children living together as a single household.

Age Grades

Social categorizations based on age, often used in various cultures to organize community roles and responsibilities according to life stages.

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Societies characterized by fluidity in social mobility and the absence of rigid caste systems, allowing individuals to change their social status.