Question

The direct write-off method…

	A.	recognizes losses from uncollectable accounts in the period when a firm decides that specific customers' accounts are uncollectable
	B.	does not usually recognize the loss from uncollectable accounts in the period in which the sale occurs and the firm recognizes revenue
	C.	provides firms with an opportunity to manage earnings each period by deciding when particular customers' accounts become uncollectable
	D.	all of the above
	E.	none of the above

Answer 1

Direct Write off Method: Write off the uncollectable accounts / bad debts immediately if there is no possibility of further collection from the account.

A. TRUE
recognizes losses from uncollectable accounts in the period when a firm decides that specific customers' accounts are uncollectable: Yes if a  specific customers' accounts are uncollectable firm can write off the same amount immediately. It will help the firm reducing taxable income.

B. FALSE

does not usually recognize the loss from uncollectable accounts in the period in which the sale occurs and the firm recognizes revenue: Direct write off method is related to recognise uncollectable accounts .

C.FALSE
provides firms with an opportunity to manage earnings each period by deciding when particular customers' accounts become uncollectable: A firm can write off accounts only when it is uncollectible.