ew History Bookmarks Window Help edugen wileypluscom Under w

ew History Bookmarks Window Help edugen wileyplus.com Under what conditions may a corporation use the direct method of accounting. Weygandt, Financial& Managerial Accounting, 2e Gradebook ORION Downloadable eTextbook ment 06:09 PM /Remaining: 47 min. MY INSTRUCT Online Exam #3-Question #2 Under what conditions may a corporation use the direct method of accounting for bad debts? Question Attempts: 0 G 2 3 4 5 6 8 9

Solution

Generally all the credit sales of a firm are not collected. Some customer may not pay at all. The portion of receivable which will not be collected in future is the bed debt. The direct write-off method allows a business to record Bad Debt Expense only when a specific account has been considered uncollectible. The account is removed from the Accounts Receivable balance and Bad Debt Expense is increased.

The direct write-off of bad debt method is generally applied by small businesses and companies that are not required to use generally accepted accounting principles (GAAP) to maintain their books.