The Direct Write-off Method for bad debts:
A)Removes a customer's uncollectible account receivable and records a bad debt expense and is recorded at the time a specific customer's account becomes uncollectible
B)Complies with GAAP
C)Estimates bad debt expense and establishes an allowance or reserve for uncollectible
D)None of the above

Question

Quizplus · Accepted Answer

The Direct Write-off Method removes a customer's uncollectible account receivable and records a bad debt expense at the time a specific customer's account becomes uncollectible. This method does not comply with GAAP as it does not establish an allowance or reserve for uncollectible accounts.

The Direct Write-Off Method for Bad Debts