One of the weaknesses of the direct write-off method is that it
A) understates accounts receivable on the balance sheet
B) violates the matching principle
C) is too difficult to use for many companies
D) is based on estimates

Question

Quizplus · Accepted Answer

The direct write-off method violates the matching principle by not matching the expenses with the revenues in the same period. It only recognizes bad debts when they occur, which may lead to inaccurate reporting of income for the period.

One of the Weaknesses of the Direct Write-Off Method Is