The materiality constraint, as applied to bad debts: a permits the use of the direct write-off method when bad debts expenses are relatively small. b requires use of the allowance method for bad debts. c requires use of the direct write-off method. d requires that bad debts not be written off. e requires that expenses be reported in the same period as the sales they produce.

A) Permits the use of the direct write-off method when bad debts expenses are relatively small.

Explanation:

The materiality constraint is used to determine whether a business transaction is relevant or not to the financial results of an organization. The materiality constraint is not a given threshold, it varies depending on the size of an organization.

For example, a $10,000 transaction may not be materially important to a multinational corporation, but will be extremely important to a sole partnership.

All transactions that exceed the threshold set by the materiality constraint must be included in the financial statements of the organization.

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rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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