Question

The following list describes aspects of either the allowance method or the direct write-off method to account for bad debts. For each item listed, indicate if the statement best describes either the allowance (A) method or the direct write-off (DW) method.

1. No attempt is made to predict bad debts expense.

Short answer

The correct answer is Direct write-off (DW) method.

Step-by-step solution

Introduction to Bad debt expense

It is a type of expenditure an organization incurs to settle their account of bad debt because of the inability to pay a debtor's cash.

Reason for the answer

If an organization is not attempting to determine the amount of total bad debt expense, it will be settled through the method of direct write-off method since it implies that the debtor has paid the due amount in full to the firm.