The direct write-off method conforms to the matching principle better than the allowance method.

Question

Quizplus · Accepted Answer

The allowance method is considered to conform to the matching principle better than the direct write-off method as it matches the estimated amount of bad debts to the period in which the related sales were made. The direct write-off method, on the other hand, does not match bad debt expense to the period in which the corresponding revenue was earned, which goes against the matching principle.

The Direct Write-Off Method Conforms to the Matching Principle Better