Question

question content area the direct write-off method of accounting for uncollectible accounts a.is often used by small companies and companies with few receivables b.emphasizes cash realizable value c.emphasizes the matching of expenses with revenues d.emphasizes balance sheet relationships

Answer 1

The direct write-off method involves writing off a bad debt expense directly against the corresponding receivable account.

What is direct write-off method?

Bad debts can be accounted for in one of two ways: directly or indirectly. Bad debts are only recorded once it is determined that they cannot be recovered. In other words, when it is established beyond a reasonable doubt that the debt cannot be collected, a business will merely declare the bad debt charge and reduce its accounts receivable.

Due to the fact that the direct write-off method frequently records bad debt in a period other than the period in which the transaction was recorded. As a result, it frequently fails to align costs with income.

Many small businesses employ the direct write-off approach, which doesn't call for audited financial records, to record uncollectible accounts.

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