The matching principle requires use of the allowance method of accounting for bad debts.

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The matching principle requires that expenses be recognized in the same period as the related revenue. In the case of accounts receivable, the revenue is recognized at the time of sale, but there is a risk of not being paid. Therefore, the allowance method of accounting for bad debts is used to estimate and recognize the expense of uncollectible accounts in the same period as the related revenue. This is consistent with the matching principle.

The Matching Principle Requires Use of the Allowance Method of Accounting