What are the two different methods for accounting for bad debts:

Question

Quizplus · Accepted Answer

These are the two recognized methods for accounting for bad debts. The Direct Write-off method writes off the uncollectible debts as soon as they are identified, while the Allowance method estimates the amount of uncollectible debts and sets up a reserve account to offset the accounts receivable on the balance sheet. Both methods have pros and cons, but the Allowance method is generally considered more accurate and conservative because it matches the estimated bad debts with the revenue that they relate to.

What Are the Two Different Methods for Accounting for Bad