The expense recognition principle, as applied to bad debts:

Multiple Choice

• Requires that expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.

• Favors the use of the direct write-off method for bad debts.

• Favors the use of the allowance method of accounting for bad debts.

• Requires that bad debts be disclosed in the financial statements.

• Requires that bad debts not be written off.