Which of the following is an advantage of using the direct write-off method?
A) The revenue associated with the sale might be recognized in one period and the expense resulting from the uncollectible account recognized in another.
B) The amount of Bad Debt Expense recognized in a given period is subject to manipulation by management.
C) The amount of Accounts Receivable reported on the balance sheet does not represent the amount of cash actually expected to be collected.
D) It is very simple to apply.

Question

Quizplus · Accepted Answer

The direct write-off method is simple to apply, as it involves simply recognizing a bad debt expense when a customer's account is deemed uncollectible and writing off the specific amount owed. However, this method does not provide an accurate representation of the amount of accounts receivable that will actually be collected, and the recognition of bad debt expense may not align with the recognition of revenue in the same accounting period. Additionally, since specific customer accounts are written off individually, there is a risk of manipulation by management in terms of which accounts are chosen to be written off.

Which of the Following Is an Advantage of Using the Direct