What is the difference between the allowance method and the
direct write-off method of accounting for...
What is the difference between the allowance method and the
direct write-off method of accounting for uncollectible accounts
and what are the advantages of using each method? Explain.
What is the
difference between direct write-off method and allowance
method?
Direct write-off
method, a company does not anticipate bad debt expense. The
allowance method is preferred over the direct write-off method
because the accounts receivable will be presented on the balance
sheet with a reduction called the allowance for doubtful
accounts.
Jan 1.
At the beginning of the year, AA prepared the Aging
of Accounts Receivable Schedule.
Complete the table.
Customer
Amount
Current
Number of Days Past Due
(Not...
Discuss the differences between the allowance method and the direct write-off method for recording uncollectible accounts. Which of the two is acceptable under financial accounting rules?
Compare and contrast the following:
1A) allowance method and the direct write-off method of
accounting for uncollectible accounts.
1B) accounts receivable and notes receivable.
1C) accounts receivable turnover ratio with previous ratios
(i.e., inventory turnover ratio, gross margin percent, return on
sales, return on assets and return on equity).
1. Why is the allowance method preferred over the direct
write-off method of accounting for uncollectible receivables?
a. The allowance method uses estimates.
b. The allowance method always accurately predicts the portion
of receivables that will not be collected.
c. The allowance method improves the matching of bad debt
expense and revenues.
d. The allowance method will provide higher net income over
time.
2. Which of the following is a characteristic of a perpetual
inventory system?
a. Physical inventory counts...
How is the allowance method of accounting for bad debts
different from the direct write off method? Which is the preferred
method? Why?
In what ways are accounts receivable similar to a note
receivable? How are they different?
Why might a company choose to issue a note receivable over an
account receivable?
How is the allowance method of accounting for bad debts
different from the direct write off method? Which is the preferred
method? Why? In what ways are accounts receivable similar to a note
receivable? How are they different? Why might a company choose to
issue a note receivable over an account receivable?
Explain the differences between the Direct Write- off Method and
Allowance Method.
Answer these questions: which method is more accurate? which method
is better at matching?
Compare and contrast the direct write-off method and
the allowance method for bad debts.
At a minimum, please consider the following in your
answer:
When is the expense for uncollected accounts receivable
recognized under each method?
Why is the direct write-off method not considered to
follow generally accepted accounting