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

Question

Quizplus · Accepted Answer

Under the direct write-off method, Bad Debt Expense is recorded when an account is determined to be worthless, meaning the business has decided it will not be able to collect the debt. This could happen after the customer has gone out of business or cannot be located, for example. This method is generally only used by small businesses with a limited number of customers and lower sales volumes.

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