When is it acceptable to use the direct write-off method of accounting for uncollectible accounts?
A)If the dollar amount of uncollectible accounts is not material.
B)If most uncollectible accounts do not occur in the period of sale.
C)If most sales are made to other businesses.
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

The direct write-off method is only acceptable if the dollar amount of uncollectible accounts is not material. This is because this method does not properly match expenses with revenues and does not provide accurate financial information. Therefore, it should only be used when the amount of uncollectible accounts is immaterial and does not have a significant impact on the financial statements. B and C are not correct because they do not relate to the acceptability of the direct write-off method.

When Is It Acceptable to Use the Direct Write-Off Method