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29 September, 04:51

Two methods of accounting for uncollectible accounts are the

a. allowance method and the accrual method

b. direct write-off method and the accrual method

c. allowance method and the net realizable method

d. direct write-off method and the allowance method

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Answers (1)
  1. 29 September, 05:12
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    Correct option is (d)

    Explanation:

    An account is termed uncollectible if they are not expected to be paid. There are two methods to write off these accounts:

    1. Direct write off method: In this, the account recognized at uncollectible is directly charged to profit and loss account as an expense.

    2. Allowance method: Under this method, a provision for doubtful debt is created where anticipated bad debts are charged. When an account needs to be written off, doubtful debt is debited and accounts receivables are credited.
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