The direct write-off method of recognizing uncollectible accounts expense:
A)Is acceptable only when most of the company's sales are on credit.
B)Records uncollectible accounts expense when individual accounts receivable are determined to be worthless.
C)Records uncollectible accounts expense when customers exceed their credit limits.
D)Uses a valuation account to record specific customer accounts deemed uncollectible.

Question

Quizplus · Accepted Answer

The direct write-off method recognizes uncollectible accounts expense when individual accounts receivable are determined to be worthless. It does not rely on customers exceeding their credit limits, and it does not use a valuation account to record specific customer accounts deemed uncollectible. While the method is commonly used when most of a company's sales are on credit, it is not a requirement for using the direct write-off method.

The Direct Write-Off Method of Recognizing Uncollectible Accounts Expense