The direct write-off method
A) is acceptable for financial reporting purposes.
B) debits Allowance for Doubtful Accounts to record write-offs of accounts.
C) shows only actual losses from uncollectible accounts receivable.
D) estimates bad debt losses.

Question

Quizplus · Accepted Answer

The direct write-off method shows only actual losses from uncollectible accounts receivable, meaning it only records write-offs when they occur instead of estimating potential bad debt losses. This method is not acceptable for financial reporting purposes as it does not accurately reflect the true state of a company's accounts receivable. It also does not involve debiting the Allowance for Doubtful Accounts since no estimates are made.

The Direct Write-Off Method