The Direct Write-Off Method Is Acceptable for Financial Reporting Purposes

Multiple Choice

The direct write-off method is acceptable for financial reporting purposes only if the bad debt losses are insignificant.

A) This is a false statement because the direct write-off method violates the matching principle.
B) This is a true statement based on the concept of materiality.
C) This is a false statement because the direct write-off method can only be used for tax reporting.
D) This is a true statement because companies can choose either the direct write-off or the allowance method for financial reporting, as long as they consistently apply the method.