Respuesta :
The direct write-off method of accounting for uncollectible accounts
d. is not generally accepted as a basis for estimating bad debts.
Explanation:
- A method for recognizing bad debts expense arising from credit sales. Under this method there is no allowance account.
- Rather, an account receivable is written-off directly to expense only after the account is determined to be uncollectible.
- One method of recording the bad debts is referred to as the direct write off method which involves removing the specific uncollectible amount from accounts receivable and recording this as a bed debt expense in the income statement of the business.
- The mechanics of the allowance method are that the initial entry is a debit to bad debt expense and a credit to the allowance for doubtful accounts (which increases the reserve).
- The allowance is a contra account, which means that it is paired with and offsets the accounts receivable account
