Which statement about small-balance write-off thresholds is true?

Which statement about small-balance write-off thresholds is true?

• A. They are the same across all organizations
• B. They can vary from $25 to $400
• C. They are always set at $100
• D. They do not exist in AR practices

Answer: (B)

Small-balance write-off thresholds are important in accounts receivable practices as they help organizations determine when it is not cost-effective to pursue collection efforts on outstanding amounts. The statement that these thresholds can vary from $25 to $400 is accurate because different organizations establish their own specific thresholds based on their operational needs, industry standards, and the cost-effectiveness of collection efforts. For example, a company may decide that it is not worth the resources to pursue debts below a certain amount, leading to varied thresholds that can accommodate fluctuations in company size, customer base, or service offerings. This variability allows organizations to tailor their approach to managing accounts receivable in a way that aligns with their financial strategies and operational efficiencies.

Small-balance write-off thresholds are important in accounts receivable practices as they help organizations determine when it is not cost-effective to pursue collection efforts on outstanding amounts. The statement that these thresholds can vary from $25 to $400 is accurate because different organizations establish their own specific thresholds based on their operational needs, industry standards, and the cost-effectiveness of collection efforts.

For example, a company may decide that it is not worth the resources to pursue debts below a certain amount, leading to varied thresholds that can accommodate fluctuations in company size, customer base, or service offerings. This variability allows organizations to tailor their approach to managing accounts receivable in a way that aligns with their financial strategies and operational efficiencies.