Question

The direct write off is used when:

a. Uncollectible accounts are not anticipated or immaterial.
b. A company elects to use this method as one of several alternatives.
c. A company has greater cash outflows than cash inflows.
d. the company expects excessive sales return.

Answer 1

Answer:

The correct answer is letter "A": Uncollectible accounts are not anticipated or immaterial.

Explanation:

Direct write-off is a method used to record debts from credit sales. An allowance account is not used with this method but an account receivable directly written-off for the outstanding amount once it is determined to be uncollectible. This method is used for tax-reporting purposes.