Under the allowance method, no attempt is made to match bad debts expense to sales revenues in the same accounting period.

Question

Quizplus · Accepted Answer

Under the allowance method, an attempt is made to match bad debts expense to sales revenues in the same accounting period by estimating the amount of uncollectible accounts and creating a contra-asset account, Allowance for Doubtful Accounts, to offset the Accounts Receivable balance. This allows for a more accurate representation of the company's net realizable value of accounts receivable on the balance sheet.

Under the Allowance Method, No Attempt Is Made to Match