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5 November, 18:36

What are some limitations that Champion Performance will encounter when using the direct write-off method?

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  1. 5 November, 22:34
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    In direct write off method following entry is passed

    Dr: Bad debts expense

    Cr: To accounts receivable

    Explanation:

    It does not account for any provision It is against matching principle i. e. expense needs to match with revenue generated Ignoring matching principle and prudence concept, it results in financial statements that does not give true & fair view It does not allow chances to get collections from customers, as occurs in allowance method
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