accrual-basis taxpayers cannot use the allowance method to estimate bad debt. The IRS allows a special method...
accrual-basis taxpayers cannot use the allowance method to estimate bad debt. The IRS allows a special method that does not officially use the allowance method, but the effect is the same as if they used the allowance method. Hint: review the expanded solutions for chapter 3.
1. What is the name of this method?
2. What kind of businesses may or may not use this method?
3. In what way is this method similar to the allowance method and in what way is it technically different?
Homework Answers
1. Other method is direct write off method
2. Small business owners with no accounting background can use it.
3. Its is different from allowance method because it does not follow the accrual method of accounting. It deals with actual bad debts instead of making a provision for them. It is similar in way because accounts receivable balance accounts receivable balance is being affected in both the cases
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accrual-basis taxpayers cannot use the allowance method to
estimate bad debt. The IRS allows a special method...
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