0
Add your answer:
Earn +20 pts
The direct write off method of accounting for uncollectible accounts violates the?
The_direct_write_off_method_of_accounting_for_uncollectible_accounts_violates_the
The direct write off method records uncollectible accounts expense in the year the specific accounts receivable is determined to be uncollectible is this true or false?
t
Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible True or False?
true
The two methods of accounting for uncollectible receivables are the allowance method and the?
The direct write-off method. For tax purposes, companies must use the direct write-off method, under which bad debts are recognized only after the company is certain the debt will not be paid. Before determining that an account balance is uncollectible, a company generally makes several attempts to collect the debt from the customer. Recognizing the bad debt requires a journal entry that increases a bad debts expense account and decreases accounts receivable.
Why does the direct write-off method of accounting for bad debts usually fail to match revenues and expenses?
Direct write-off normally does not match because the revenue from the sales was reported in an earlier period. It affects the revenues and expenses in the period it is written off in. If a company has many credit sales then it would be better to instead estimate an allowance for uncollectible credit accounts. That way the revenues and expenses are affected in each period and the sales numbers will represent the business' sales more accurately; provided the percentage is watched and adjusted as needed.
The direct write off method of accounting for uncollectible accounts violates the?
The_direct_write_off_method_of_accounting_for_uncollectible_accounts_violates_the
The direct write off method records uncollectible accounts expense in the year the specific accounts receivable is determined to be uncollectible is this true or false?
t
Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible True or False?
true
The two methods of accounting for uncollectible receivables are the allowance method and the?
The direct write-off method. For tax purposes, companies must use the direct write-off method, under which bad debts are recognized only after the company is certain the debt will not be paid. Before determining that an account balance is uncollectible, a company generally makes several attempts to collect the debt from the customer. Recognizing the bad debt requires a journal entry that increases a bad debts expense account and decreases accounts receivable.
Where can one find information about the International accounting standards board?
There are a few places where one can find out information about the International Accounting Standards Board. Such places include: The direct website, company accounts, and numerous accounting standard websites.
Why does the direct write-off method of accounting for bad debts usually fail to match revenues and expenses?
Direct write-off normally does not match because the revenue from the sales was reported in an earlier period. It affects the revenues and expenses in the period it is written off in. If a company has many credit sales then it would be better to instead estimate an allowance for uncollectible credit accounts. That way the revenues and expenses are affected in each period and the sales numbers will represent the business' sales more accurately; provided the percentage is watched and adjusted as needed.
What does the term 'process costing' refer to?
The term "process costing" refers to the accounting method that takes into accounts all costs, either direct or indirect, during the manufacturing process of a product.
How are bad debts accounted for under the direct write off method?
Direct write-off does not correspond to the time of the initial debt. It charges bad debts against revenue for the current accounting period (i.e. when the debt is proven to be uncollectible).The allowance method is a set-aside wherein a business can retroactively assign bad debts to the corresponding revenue period, or to the one(s) following it.
Why is the direct write off method not accepted by GAAP?
There are two reasons why the direct write-off method is not allowed. First, applying the matching principle implies that the cost of the uncollectible accounts need to be expensed in the period of the sale. Giving credit to customers helps to generate sales (if this were not the case, the firm would simply demand payment at time of delivery). Thus, not creating an allowance violates the matching principle. Second, with the direct write-off method, accounts receivable are at the nominal value, whereas the 'true' value (the amount that is expected to be collectible) is most likely lower. Thus, the direct write-off is likely to overstate the value of accounts receivable.
What are the differences between direct cost and indirect cost in management accounting.?
what are the differences between direct cost and indirect cost in financial accounting
What is prime cost in cost accounting?
Sum of direct materials and direct labor
What principle assumption or constraint does the direct write off method violate if uncollectibles are significant?
The accounts receivables will need to match the bad debt being written, and therefore this applies to the matching principle in accounting.
