AASB requires companies to use the:
A)direct write-off method to evaluate bad debts.
B)allowance method to evaluate bad debts.
C)360-day method to evaluate bad debts.
D)amortisation method to evaluate bad debts.

Question

Quizplus · Accepted Answer

AASB (Australian Accounting Standards Board) requires companies to use the allowance method to evaluate bad debts. This is because it provides a better matching of expenses to revenues, and is considered a more accurate reflection of a company's financial position. The direct write-off method is not allowed under AASB as it violates the matching principle, and the 360-day method and amortisation method are not relevant to evaluating bad debts.

AASB Requires Companies to Use The