Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 28 - No. 12)
How does the direct write-off method impact a company's financial statements?
The income statement is affected in the period the debt is determined to be uncollectible.
The balance sheet is affected in the period the debt is determined to be uncollectible.
The balance sheet reflects the net realizable value of accounts receivable.
The income statement always matches revenue and bad debt expense in the period of the sales
Explanation
The direct write-off method impacts the income statement and balance sheet in the period the debt is determined to be uncollectible.
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