The balance of Allowance for Doubtful Accounts prior to making the adjustment to record Bad Debt Expense
A)is relevant when using the percentage-of-receivables basis.
B)is relevant when using the direct write-off method.
C)is relevant to both the percentage-of-receivables basis and the direct write-off method.
D)will never show a balance at this stage in the accounting cycle.

Question

Quizplus · Accepted Answer

The balance of Allowance for Doubtful Accounts prior to making the adjustment to record Bad Debt Expense is only relevant when using the percentage-of-receivables basis. The direct write-off method does not utilize the Allowance for Doubtful Accounts.

The Balance of Allowance for Doubtful Accounts Prior to Making