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 |
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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