Under the allowance method, companies debit every bad debt write-off to Allowance for Doubtful Accounts rather than to Bad Debts Expense.

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This is true. When a bad debt is written off, the allowance for doubtful accounts is decreased, which has already been established as a contra asset account used to reduce the balance in accounts receivable to the net realizable value. Writing off bad debts directly to the allowance account reduces the amount of accounts receivable on the balance sheet while leaving the allowance account balance unchanged.

Under the Allowance Method, Companies Debit Every Bad Debt Write-Off