ACCOUTING PRIN SET LL INCLUSIVE
ACCOUTING PRIN SET LL INCLUSIVE
14th Edition
ISBN: 9781119815327
Author: Weygandt
Publisher: WILEY
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Chapter 9, Problem 8Q
To determine

Bad debts:

Bad debts can be defined as those accounts receivable that a firm does not expect to collect and has written off to its income statement under the head, expense. They are also termed as irrecoverable debts.

Bad debts are considered as expenses, as they are not anticipated to generate any financial benefits in the future. It leads to a corresponding decrease in the balance of accounts receivable on the balance sheet, as the bad debts are no longer an asset.

To determine: The method by which bad debts are accounted for under the direct write-off method and the disadvantages of the method.

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