The two methods of accounting for uncollectible receivables are ________.
A)the direct write-off method and the liability method
B)the asset method and the sales method
C)the allowance method and the liability method
D)the allowance method and the direct write-off method

Question

Quizplus · Accepted Answer

The two methods of accounting for uncollectible receivables are the allowance method and the direct write-off method. The direct write-off method records uncollectible accounts as a bad debt expense at the time they are determined to be uncollectible, while the allowance method estimates uncollectible accounts and records an allowance for doubtful accounts to adjust the accounts receivable to their net realizable value. The allowance method is considered better because it matches expenses with revenues and provides a more accurate representation of the company's financial position.

The Two Methods of Accounting for Uncollectible Receivables Are ________