Question

The direct write-off method is used when: Multiple Choice Uncollectible accounts are not anticipated or are immaterial. A company elects to use this method as one of several alternatives. A company has greater cash outflows than cash inflows. A company expects excessive sales returns.

Answer 1

Answer:

The correct answer is letter "B": A company elects to use this method as one of several alternatives.

Explanation:

The direct write-off method is one of two main approaches used to recognize bad debts being the other the allowance method. Using the direct write-off method implies straight recognizing an account as uncollectible as soon as the firm determines there will not be payment for it. There is no allowance account created for the debt. The bad debt, in either case, diminishes the company's period revenue.