When comparing the direct write-off and allowance methods,the major difference is ________.
A) when to record bad debts expense
B) when to recognize revenue
C) determining the balance of the Allowance for Bad Debts account
D) developing adequate procedures for granting credit

Question

Quizplus · Accepted Answer

The major difference between the direct write-off and allowance methods is when to record bad debt expense. Under the direct write-off method, bad debt expense is recorded when a specific account receivable is deemed uncollectible and written off. Under the allowance method, bad debt expense is estimated and recorded at the end of each accounting period based on a percentage of the total accounts receivable.

When Comparing the Direct Write-Off and Allowance Methods,the Major Difference