Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true?
A)The bad debt expense is not matched with the related sales
B)Revenue is overstated in the year of sales
C)It violates the matching principle of accounting
D)All of the above

Question

Quizplus · Accepted Answer

The direct write-off method records bad debt expense only when a specific account is deemed uncollectible, which means the expense is not matched with the revenue it helped generate, violating the matching principle. Consequently, revenue can appear overstated in the year of sales since the expense recognition is delayed.

Under the Direct Write-Off Method of Recognizing a Bad Debt