The direct write-off method of accounting for bad debts is the preferred method under generally accepted accounting principles. does not require estimates of bad debt losses. uses an allowance account. uses a contra asset account quizler.

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Business

Madison Burch

2 June, 11:15

The direct write-off method of accounting for bad debts is the preferred method under generally accepted accounting principles. does not require estimates of bad debt losses. uses an allowance account. uses a contra asset account quizler.

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Ulises · Answer 1

does not require estimates of bad debt losses.

Explanation:

In a deduction, the bank includes bad debt as a loss on its tax return. This deduction is also called an "amortization." Amortization reduces the bank's profits and this reduces its taxable income. This accounting procedure can reduce the bank's overall taxes, which is the goal of a deduction. The designation of the debt as bad debt does not mean that the bank will never collect it, only that it has not been able to collect it until now.