Question

A separate allowance account is established under the direct write-off method.

a. right
b. not right

Answer 1

Under the direct write-off method, a separate allowance account is not established.

Step-by-step explanation:

In the direct write-off method of accounting, a separate allowance account is not established. Instead, under this method, bad debts are written off directly to the expense account when they are deemed uncollectible. This method is typically used by small businesses or for tax purposes, as it does not require estimating the amount of bad debts.