One of the methods for recognizing uncollectible accounts is the direct write-off method. Indicate whether each of the following statements is true or false.
a)The direct write-off method is not permitted by GAAP if uncollectible accounts expense is immaterial.b)The direct write-off method is allowed for some companies because of the going concern concept.c)The direct write-off method requires an advance estimate of anticipated uncollectible accounts.d)The direct write-off method is easier to use than the allowance method.e)The direct write-off method does not require the use of an allowance account.

Question

Quizplus · Accepted Answer

b)False c)False d)True e)Ta)This is false. GAAP permits the use of the direct write-off method if uncollectible accounts expense is immaterial.b)This is false. The going concern concept does not allow for the use of the direct write-off method.c)This is false. Only the allowance method requires an advance estimate of anticipated uncollectible accounts.d)This is true. The direct write-off method is easier to use than the allowance method because it does not require estimates.e)This is true. There is no allowance account if a company uses the direct write-off method.

One of the Methods for Recognizing Uncollectible Accounts Is the Direct