Companies follow both the expense recognition (matching) principle and the materiality constraint when applying the direct write-off method.

Question

Quizplus · Accepted Answer

The direct write-off method does not follow the expense recognition (matching) principle, as it recognizes bad debt expense only when an account is deemed uncollectible, which may not match the period in which the related sales revenue was recognized.

Companies Follow Both the Expense Recognition (Matching) Principle and the Materiality