The Direct Write-off Method for bad debts:
A)Complies with GAAP
B)Removes a customer's uncollectible account receivable and records a bad debt expense and is recorded at the time a specific customer's account becomes uncollectible
C)Estimates bad debt expense and establishes an allowance or reserve for uncollectible
D)None of the choices are correct

Question

Quizplus · Accepted Answer

The Direct Write-off Method records bad debt expense when a specific account is deemed uncollectible, which does not comply with GAAP as it does not match expenses with revenues in the same period.

The Direct Write-Off Method for Bad Debts