Under GAAP,which of the following is NOT an acceptable method of estimating the amount of bad debt expense at the end of the accounting period?
A) percent-of-receivables
B) percent-of-sales
C) direct write-off
D) aging-of-receivables

Question

Quizplus · Accepted Answer

The direct write-off method is not an acceptable method of estimating bad debt expense under GAAP. This method only records bad debt expense when a specific account becomes uncollectible, which is not an accurate representation of the company's overall bad debt estimate. The other three methods (percent-of-receivables, percent-of-sales, aging-of-receivables) are all acceptable methods of estimating bad debt expense under GAAP.

Under GAAP,which of the Following Is NOT an Acceptable Method