Which of the following statements is not correct?
A) The use of the direct charge-off method of recording losses from uncollectible accounts usually results in the balance in the Accounts Receivable account being overstated.
B) The direct charge-off method of recording losses from uncollectible accounts is the method required by Federal income tax laws.
C) The direct charge-off method of recording losses from uncollectible accounts is an application of the matching principle.
D) When using the direct charge-off method,there is no Allowance for Doubtful Accounts account.

Question

Quizplus · Accepted Answer

The direct charge-off method does not adhere to the matching principle because it records bad debt expense only when specific accounts are deemed uncollectible, rather than estimating and matching expenses to revenues in the same period.

Which of the Following Statements Is Not Correct