Which of the following methods does NOT accurately match revenues and expenses?
A) direct writeoff method
B) allowance method
C) percentage of credit sales method
D) aging of accounts receivable method

Question

Quizplus · Accepted Answer

The direct writeoff method does not accurately match revenues and expenses because it only records bad debts when they are actually uncollectible, rather than estimating and recognizing them beforehand. This results in delays in recognizing expenses and may also result in overstatement or understatement of profits in the period the bad debt is recorded. The allowance method, percentage of credit sales method, and aging of accounts receivable method are all accepted methods for estimating and recognizing bad debts and accurately matching revenues and expenses.

Which of the Following Methods Does NOT Accurately Match Revenues