When a large account receivable balance is due from one client it is logical to use the direct write-off method to adjust the bad debt expense and accounts receivable balance. Under different circumstances, another method is used called the allowance method. Discuss the best reason(s) for using the allowance method and give some examples of companies that are likely to use that method. Also explain why it would ever be appropriate to use the direct write-off method, especially since it is not GAAP.

Answer rating: 100% (QA)

i Because customers do not always keep their promises to pay companies must provide for these uncollectible accounts in their records ii Companies use two methods for handling uncollectible accounts T... View the full answer