Question

The direct write-off method
A) is acceptable for financial reporting purposes.
B) debits Allowance for Doubtful Accounts to record write-offs of accounts.
C) estimates bad debt losses.
D) shows only actual losses from uncollectible accounts receivable.

Answer 1

Answer:

C)

Explanation:

The direct write-off method is a method used for estimating or recognizing bad debt loses from credit sales or use. In this method the account is written off directly after the expense in question is found to be completely uncollectible, and no allowance account is exists. Unlike the Allowance method which just records bad debt loss when accounts are deemed unlikely to be collected.