When Comparing the Allowance Method of Accounting for Bad Debts

question 60

Multiple Choice

When comparing the allowance method of accounting for bad debts with the direct write-off method,which of the following is true?

• A) The direct write-off method is exact and also better illustrates the matching principle.
• B) The allowance method is less exact but it better illustrates the matching principle.
• C) The direct write-off method is theoretically superior.
• D) The direct write-off method requires two separate entries to write off an uncollectible account.

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