The allowance method is preferred over the direct write-off method because it better matches the expense of bad debts in the same period as the related sale.

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The statement is true. The allowance method estimates the amount of bad debt expense and creates a contra asset account (allowance for doubtful accounts) to reflect the estimated amount of uncollectible accounts. This method matches the expense with the period in which the related sale occurs, whereas the direct write-off method does not match the expense with the period of the sale.

The Allowance Method Is Preferred Over the Direct Write-Off Method