Accountıng I Deneme Sınavı Sorusu #1313948

Which of the following statement is true for "Direct Write-off Method"?


Bad debts expense is not reflected actual losses from the uncollectible receivables

The loss amount is not charged to the uncollectible account expense

Companies use allowance account for the expenses based on estimates

Companies could estimate bad debts losses in this method

It is mainly used by relatively small and private companies


Yanıt Açıklaması:

The other way in which uncollectible receivables can be calculated is through Direct Write-off Method, which is mainly used by relatively small and private companies. Under this method, a company does not estimate bad debts losses and does not use allowance account for the expenses based on estimates. Instead, when a specific receivable is considered to be uncollectible or worthless, the loss amount is charged directly to the uncollectible account expense.
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