Question

The direct write-off method is not normally permitted because it violates the

a) Conservatism principle
b) Consistency principle
c) Materiality principle
d) Matching principle

Answer 1

The direct write-off method violates the Matching principle.

Step-by-step explanation:

The direct write-off method is not normally permitted because it violates the Matching principle. The Matching principle states that expenses should be matched with the revenues they help generate in the same accounting period. By using the direct write-off method, companies only recognize bad debts when they actually occur, which does not align with the Matching principle.