D is corrent because when accounts receivable are written off they should be controlled for possible future collection. Accordingly, they should be recorded to maintain accountability in a separate ledger. If they were simply written off and forgotten, there would be no means of maintaining accountability over these contingent assets.
A is incorrect because accounts transferred to an attorney for collection would not be written off (i.e., if they were bad debts, there would be no basis for collection proceedings).
B is incorrect because the requirement is for proper internal control over the receivables rather than information to prepare tax returns.
C is incorrect because credit managers should not have control over accounts that have been written off because there is not sufficient separation of functional responsibilities.
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