Which of the following is a limitation of the direct write-off method of accounting for uncollectibles? a) The direct write-off method overstates assets on the balance sheet. b) The direct write-off method does not set up an allowance for uncollectibles. c) The direct write-off method does not match expenses against revenue very well. d) All of the above

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ayfat23 ayfat23 · Answer 1 · 2021-11-03T12:43:17+01:00

The statements that describes the limitations as regards the direct write-off method of accounting are:

a) The direct write-off method overstates assets on the balance sheet.

b) The direct write-off method does not set up an allowance for uncollectibles.

c) The direct write-off method does not match expenses against revenue very well.

The direct write-off method can be regarded as accounting method that is utilized to make uncollectible accounts receivable to be written off as bad debt.

This method is accurate but there are some limitations to it such as; It doesn't set up allowance for those collectibles. The matching of revenue against expenses is not that accurate when this method is been used.

Therefore, option D is correct.

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