Why is the allowance method of accounting for bad debts more consistent with accounting standards than the

Question:

Why is the allowance method of accounting for bad debts more consistent with accounting standards than the direct write-off method? Under what circumstances is the direct write-off method acceptable?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Understanding Financial Accounting

ISBN: 978-1118849385

1st Canadian Edition

Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald

See More Books

Question Posted: Jun 11, 2015 08:16 AM

See More Questions

Why is the percentage-of-credit-sales method of accounting for bad debts referred to as an income statement approach, whereas the percentage-of-receivables method is referred to as a balance sheet...
If the allowance method of accounting for bad debts is used to determine the amount of the adjusting entry, explain the difference between using a percentage of Accounts Receivable and a percentage...
The allowance method of accounting for uncollectible accounts receivable involves the creation of contra account that shows the estimated amount of uncollectible receivables. Why would financial...
Show that the ratio of the angular speeds of a pair of coupled gear wheels is in the inverse ratio of their respective radii.
Why does Sec. 267 impose a restriction on the deductibility of expenses accrued and payable by an accrual method taxpayer to a related cash method taxpayer?
What is the pH of the solution that results when 0.093 g of Mg(OH)2 is mixed with (a) 75.0 mL of 0.0500 M HCl? (b) 100.0 mL of 0.0500 M HCl? (c) 15.0 mL of 0.0500 M HCl? (d) 30.0 mL of 0.0500 M MgCl2?
Selling at below-market prices is not the only means of putting a competitor out of business. A firm might also seek to hire individuals that have rare talents or skills, not for that firms own...
On January 1, 2014, O'Brien Company issued a $210,000, six-year, 9% installment note to Bulldog Bank. The note requires annual payments of $46,813, beginning on December 31, 2014. Journalize the...
11. A planet is revolving around the sun in an elliptical orbit. The mass of planet is m, angular momentum of planet about sun is L, and length of semi major axis is a and eccentricity are e. Time...
The Roopchand Departmental Stores, New Delhi, has a separate section to sell winter garments. This section consists of two groups : permanent clerks and temporary clerks appointed during winter...
Describe and compare the allowance method and the direct write off method for determining bad debts expense.
Explain what it means if Allowance for Doubtful Accounts has a debit balance prior to the year-end bad debts entry.
Dial-up modems for hardware support from vendors are a common practice and as a rule should be allowed. A. True B. False
Explain why the linear probability model exhibits heteroskedasticity.
How to interpret the coefficient on an indicator variable in a log-linear equation.
How to estimate and interpret a regression with an indicator dependent variable.
How to include a product of two indicator variables in a regression, and how this affects model interpretation, giving an example.
The difference between the average treatment effect (ATE) and the average treatment effect on the treated (ATT).
In the figures below, determine if the estimated slope of a simple linear regression line will be negative, positive, or close to zero. (a) Y (d) lo 00 Soo 000 88 X 000 00 0 %0 0 X 00 pon 000 0 0...
Stephen Schor, an accountant in New York City, advised his client, Andre Romanelli, Inc., to open an account at J. P. Morgan Chase Bank, N.A., to obtain a favorable interest rate on a line of credit....
The following is financial information for three companies. Required For each of the above companies, calculate the cash flow from operations using the indirect method. Sales revenue Cost of goods...
Explain why a companys net income is not normally equal to its cash flows from operating activities.
Whiskey Industries Ltd., a Nanaimo, British Columbiabased company, has a December 31 year end. The companys comparative statement of financial position and its statement of income for the most recent...
Supply is the connection between the cost of a decent and the amount ready to move costing that much. It very well might be addressed as a table or diagram relating cost and amount provided. Makers,...
If 50% of the men 18-34 years old watch television on Mondays at 11 PM, and 30% of those viewers watch Monday Night Football, what is Monday Night Football's rating among men 18-34?
Assume you are a media planner and you have just completed a media plan using both magazine and television advertising. Your magazine schedule reaches 50 percent of the target audience and your...

Why is the allowance method of accounting for bad debts more consistent with accounting standards than the

Question:

Step by Step Answer:

The allowance method means that the estimated bad debts expense is recorded i...View the full answer

Understanding Financial Accounting

Students also viewed these Accounting questions