Chapter 9, Problem 4QS

Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW) method.

___ 1.    Does not predict bad debts expense.

___ 2.    Accounts receivable on the balance sheet is reported at net realizable value.

___ 3.    The write-off of a specific account does not affect net income.

___ 4.    When an account is written off, the debit is to Bad Debts Expense.

___ 5.    Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which usually occurs in a period after the credit sale.

___ 6.    Estimates bad debts expense related to the sales recorded in that period.