IIA Exam IIA-CIA-Part3 Topic 6 Question 97 Discussion

Actual exam question for IIA's IIA-CIA-Part3 exam

Question #: 97
Topic #: 6

Senior management is trying to decide whether to use the direct write-off or allowance method for recording bad debt on accounts receivables. Which of the following would be the best argument for using the direct write-off method?

AIt is useful when losses are considered insignificant.

BIt provides a better alignment with revenue.

CIt is the preferred method according to The IIA.

DIt states receivables at net realizable value on the balance sheet.

Show Suggested Answer

Suggested Answer: D

by Eve at Jan 25, 2025, 03:29 PM

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Wilson

5 days ago

But doesn't the direct write-off method violate the matching principle by not aligning bad debt expense with the revenue it relates to?

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Aja

14 days ago

I agree with Carolynn. It makes sense to use the direct write-off method if the losses are not significant.

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Carolynn

16 days ago

I think the best argument for using the direct write-off method is that it is useful when losses are considered insignificant.

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