The materiality principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in comparison to the company's other financial statement items such as sales and net income.

Question

Quizplus · Accepted Answer

The materiality principle allows the use of the direct write-off method when bad debts are insignificant, not when they are very large.

The Materiality Principle Permits the Use of the Direct Write-Off