Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 16 - No. 2)
Which of the following statements is true regarding the direct write-off method?
Bad debt expense is recognized when a specific account is determined to be uncollectible.
It is generally considered to be in accordance with GAAP.
It is simpler to apply than the allowance method.
It provides a more accurate valuation of accounts receivable.
Explanation
The direct write-off method doesn't try to account for uncollectible accounts until an account is known to be uncollectible, making it simpler.
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