Refer a friend and get % off! They'll get % off too.

Accounts Receivable Bad Debt Expense (Direct Write Off Method Vs Allowance Method) Based on the information in the video, discuss the primary advantages and disadvantages Watch A. Mursau's video titled "Accounts Receivable Bad Debt Expense (Direct Write

 
Accounts Receivable Bad Debt Expense (Direct Write Off Method Vs Allowance Method) Based on the information in the video, discuss the primary advantages and disadvantages
Watch A. Mursau's video titled "Accounts Receivable Bad Debt Expense (Direct Write Off Method Vs Allowance Method)":

 Based on the information in the video, discuss the primary advantages and disadvantages of applying the direct write-off over the allowance method of writing off accounts.

 

 

Accounts Receivable Bad Debt Expense (Direct Write Off Method Vs Allowance Method) Based on the information in the video, discuss the primary advantages and disadvantages of applying the direct write-off over the allowance method of writing off accounts.

 

 

 

 

Answer

 


Direct Write Off
Allowance Method
 
Advantages
 
 
1)
Simple accounting procedure. The company write off the accounts receivable only when it becomes uncollectible by debiting the bad debt expense account and crediting the accounts receivable directly.
Allowance method conform to the matching principle if the allowance for bad debt is made with reasonable accuracy.
2)
It saves the company from the determination of allowance to be made for uncollectible account, which very often involve estimation based on various analysis like ageing analysis as well as use of various ratios
It does not result in the overstatement or understatement of income subject to the accuracy of the estimation method applied to determine the allowance for bad debt. Moreover, the accounts receivables are reported at the net realizable value, which helps the management and the other stake holders to estimate accurately the accounts receivable that could be realized and converted into cash

You will get a DOCX (28KB) file

$ 5.00

$ 5.00

Buy Now

Discount has been applied.

Added to cart
or
Add to Cart
Adding ...