Which of the following methods does NOT require an adjusting entry to recognize bad debts?
A) percent-of receivables
B) aging-of-receivables
C) percent-of-sales
D) direct write-off

Question

Quizplus · Accepted Answer

The direct write-off method does not require an adjusting entry to recognize bad debts because it involves waiting until a customer's account is deemed uncollectible before writing it off as a bad debt expense. This method is not consistent with generally accepted accounting principles and is therefore only acceptable for tax purposes or in cases where bad debts are immaterial. The other three methods require adjusting entries to recognize bad debts, whether through an allowance account or a direct write-off approach.

Which of the Following Methods Does NOT Require an Adjusting