Which of the following Allowance methods is not accepted for use when a company follows international financial reporting methods?
(a) Percent-of-sales method
(b) Aging of accounts receivables method
(c) Direct write-off method
(d) Percent of accounts receivable methods
Direct Write-off Method:
Under this method, only one entry is made when an account is deemed uncollectible which is debit bad debts expense and credit accounts receivable. When the company uses this method in accounting bad debts, allowance for doubtful accounts is not used.
Answer and Explanation:
Answer to: Which of the following Allowance methods is not accepted for use when a company follows international financial reporting methods?
The correct answer is the letter (c) Direct write-off method
It is not allowed because it violates the matching principle that related expenses and revenues be recorded in the same period.
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from Financial Accounting: Homework Help ResourceChapter 3 / Lesson 20