When is it acceptable to use the direct writeoff method to account for uncollectible accounts? A)when the expected bad debts are significant B)when the company has historical data in regards to uncollectible accounts C)when the company uses the percentage of sales method D)when the expected bad debts are not significant

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Quizplus · Accepted Answer

The direct writeoff method is only acceptable when the expected bad debts are not significant. This is because the method does not match expenses with revenues, leading to an inaccurate portrayal of the company's financial performance. Instead, the allowance method should be used to estimate and record uncollectible accounts.

When Is It Acceptable to Use the Direct Writeoff Method