Which of the following is a similarity between the allowance method and the direct write-off method of accounting for bad debts?
A) Both the methods require an estimate of bad debt expense.
B) Both the methods provide for writing or charging off of uncollectible customers' accounts.
C) Both the methods are consistent with the accrual basis of accounting.
D) Both the methods are allowed under GAAP (generally accepted accounting principles).

Question

Which of the following is a similarity between the allowance method and the direct write-off method of accounting for bad debts?
A) Both the methods require an estimate of bad debt expense.
B) Both the methods provide for writing or charging off of uncollectible customers' accounts.
C) Both the methods are consistent with the accrual basis of accounting.
D) Both the methods are allowed under GAAP (generally accepted accounting principles).
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Quizplus · Accepted Answer

Both the allowance method and the direct write-off method provide for writing or charging off uncollectible customers' accounts. However, there are differences between the two methods in terms of when bad debt expense is recognized and the degree of accuracy in estimating bad debt expense.

Which of the Following Is a Similarity Between the Allowance