The direct write-off method is not normally an acceptable method for GAAP because it fails to report:

Question

Quizplus · Accepted Answer

The direct write-off method only recognizes bad debts when they are actually deemed uncollectible, thus failing to report accounts receivable for their net realizable value. This method also does not affect revenue or cash collected from customers. Using this method can result in financial statements that are not consistent with GAAP. Therefore, C is the best choice.

The Direct Write-Off Method Is Not Normally an Acceptable Method