which of the following is not a significant difference between a loans method an
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Question
which of the following is not a significant difference between a loans method and the direct write-off method of accounting for uncollectible accounts? B) one method conforms to gaap and the other does not. C) one method reports that realization realizable value on the balance sheet and the other does not D) one method requires writing off of uncollectible accounts and the other does not
QUESTION 2 Which of the following is not a significant difference between the allowance method and the direct write-off method of accounting for uncollectible accounts? a. One method requires the estimatiorof uncofect ounts and the other does not. b. One method conforms to GAAP and the other does not. C. One method reports net realizable value on the balance sheet and the other does not. d. One method requires writing off of uncollectible accounts and the other does not. 1 pointsExplanation / Answer
Answer: Option d. One method requires writing off of uncollectible accounts and the other does not.
The allowance method requires the estimation of uncollectible accounts while the direct write-off method does not. Hence this is a significant difference between the two and thus, option a. is incorrect.
The allowance method conforms to GAAP while the direct write-off method does not. Hence this is a significant difference between the two and thus, option b. is also incorrect.
The allowance method reports the net realizable value on the balance sheet while the direct write-off method does not. Hence this is a significant difference between the two and thus, option c. is also incorrect.
Option d. is correct since both the methods require writing off of uncollectible accounts and hence this is not a significant difference between the two methods but a similarity between the two.
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