Which of the following statements is true of the direct write-off method?
A)GAAP requires public companies to follow the direct write-off method.
B)It provides better matching of revenues with expenses.
C)It results in more accurate net income than any other method.
D)It is only suitable for small companies that have very few uncollectible receivables.

Question

Quizplus · Accepted Answer

The direct write-off method is only suitable for small companies that have very few uncollectible receivables because it does not consider the timing of when the bad debt expense should be recorded. It also does not provide better matching of revenues with expenses, and it is not required by GAAP for public companies. Therefore, option (D) is the only true statement.

Which of the Following Statements Is True of the Direct