Under the direct write-off method of accounting for uncollectible accounts
A) the allowance account is increased for the actual amount of bad debt at the time of write-off.
B) a specific account receivable is decreased for the actual amount of bad debt at the time of write-off.
C) balance sheet relationships are emphasized.
D) bad debts expense is always recorded in the period in which the revenue was recorded.

Question

Quizplus · Accepted Answer

Under the direct write-off method, a specific account receivable is decreased for the actual amount of bad debt at the time of write-off. This method does not use an allowance account to estimate bad debts and does not emphasize balance sheet relationships. Bad debts expense is only recorded when a specific account becomes uncollectible and is written off.

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