The Allowance Method Overcomes Shortcomings of the Direct Write-Off Method

question 31

Multiple Choice

The allowance method overcomes shortcomings of the direct write-off method because it

• A)recognizes the loss from uncollectible accounts in the period in which the sale occurs and the firm recognizes revenue.
• B)reduces the opportunity to manage earnings each period by deciding when particular customers' accounts become uncollectible.
• C)reflects the amount a firm expects to collect in cash from the accounts receivable on the balance sheet.
• D)all of the above.
• E)none of the above.

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