When a large account receivable balance is due from one client it is logical to...
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When a large account receivable balance is due from one client it is logical to use the direct writeoff method to adjust the bad debt expense and accounts receivable balance. Under different circumstances, another method is used called the allowance method. Discuss the best reasonsfor using the allowance method and give some examples of companies that are likely to use that method. Also explain why it would ever be appropriate to use the direct writeoff method, especially since it is not GAAP.
When a large account receivable balance is due from one client it is logical to use the direct writeoff method to adjust the bad debt expense and accounts receivable balance. Under different circumstances, another method is used called the allowance method. Discuss the best reasonsfor using the allowance method and give some examples of companies that are likely to use that method. Also explain why it would ever be appropriate to use the direct writeoff method, especially since it is not GAAP.
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