Under the direct write-off method of accounting for uncollectible accounts Bad Debt Expense is debited
A) when a credit sale is past due.
B) at the end of each accounting period.
C) whenever a pre-determined amount of credit sales have been made.
D) when an account is determined to be uncollectible.

Question

Quizplus · Accepted Answer

Under the direct write-off method, Bad Debt Expense is only debited when an account is determined to be uncollectible. This means that the company waits until it is absolutely sure that it will not receive payment from a customer before recognizing the expense. This method is not ideal for matching revenues and expenses because it does not take into account the aging of accounts receivable or the likelihood of certain accounts becoming uncollectible.

Under the Direct Write-Off Method of Accounting for Uncollectible Accounts