Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
A) at the end of each accounting period.
B) when a credit sale is past due.
C) whenever a pre-determined amount of credit sales have been made.
D) when an account is determined to be worthless.

Question

Quizplus · Accepted Answer

Under the direct write-off method, Bad Debts Expense is debited when an account is determined to be worthless. This means that when a company determines that a customer will not pay their outstanding balance, the company writes off the account as uncollectible and records a debit to Bad Debts Expense. This method is not based on past due dates or pre-determined amounts of credit sales.

Under the Direct Write-Off Method of Accounting for Uncollectible Accounts