The allowance method of accounting for uncollectible accounts is required by GAAP if

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The allowance method is required by GAAP when bad debts are significant in amount because it provides a more accurate reflection of the net realizable value of accounts receivable on the balance sheet. This method involves estimating uncollectible accounts at the end of each period and adjusting the allowance for doubtful accounts accordingly, ensuring that expenses are matched with the revenues they helped generate.

The Allowance Method of Accounting for Uncollectible Accounts Is Required