Direct Write Off Method - Financial Accounting

Class code: ztbl5xt
We will discuss the direct write off method related to bad debt expense and account receivable. Accounts receivable is an asset account representing amounts owed to the company from customers for past work done. It is possible that we will not receive all the accounts receivable even though the revenue has been earned. The direct write off method does not recognize the decrease in accounts receivable until the point in time it the accounts receivable is determined to be uncollected. The allowance method requires an estimate of the amount to be uncollected better aligning with the matching principle. The direct write of method is a good place to start understanding bad debt and can be used in small businesses or when the write off for bad debt is not material.

For more accounting information see website: