Which one of the following is not an accurate statement regarding the direct write-off method of accounting for bad debts?
A)The direct write-off method has some deficiencies when accounting for bad debts.
B)The direct write-off method ignores the possibility that partial collection of a company's outstanding accounts receivable may occur.
C)Under the direct write-off method,an expense is increased.
D)The allowance method for bad debts violates the matching principle,but the direct write-off method does not.

Question

Quizplus · Accepted Answer

This statement is not accurate because the allowance method for bad debts is actually consistent with the matching principle, whereas the direct write-off method is not. The allowance method estimates the amount of bad debt expense that is likely to occur and records it in the same period that the related sales are made. This is a more accurate reflection of the true expenses of the period than the direct write-off method, which only recognizes bad debt expense when a specific account is determined to be uncollectible.

Which One of the Following Is Not an Accurate Statement