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

question 168

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 debt 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 in the balance sheet at their net realizable value.

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Definitions:

Entertainment

Activities, performances, or media produced to provide enjoyment and amusement to individuals or groups.

Subsidy

is financial assistance provided by the government to individuals or groups to support an economic activity deemed beneficial.

Revealed Preferred

A concept in consumer choice theory that preferences can be determined by observing consumer choices under different constraints.

Violates WARP

Refers to a situation where an individual's choice behavior contradicts the Weak Axiom of Revealed Preferences, suggesting inconsistency in their preferences.