Question

For a company with significant uncollectible receivables, the direct write-off method is unsuitable because ________. it overstates liabilities on the balance sheet it violates the matching principle it uses estimates for determining the bad debt expenses it is not allowed for tax reasons

Answer 1

. it violates the matching principle

Step-by-step explanation:

The direct write-off method can be regarded as accounting method whereby uncollectible accounts receivable are been written off as a bad debt.This method can be regarded as one involving the charging of bad debts to expense in a case whereby

individual invoices is been identified in that instance as uncollectible.

Matching principle imcan be regarded as accounting principle which states that expenses that is been incurred during a period needed to be recorded at this same particular period that related revenues are been earned. It is principle that stressed that expenses must be invited by businesses to earn revenues.

It should be noted that For a company with significant uncollectible receivables, the direct write-off method is unsuitable because it violates the matching principle .