When preparing financial statements, the allowance method is preferred over the direct write off method because it more accurately matches revenues and expenses.

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The allowance method is preferred over the direct write off method because it more accurately matches revenues and expenses. The direct write off method delays the recognition of expenses until they are actually incurred, which can distort the timing of revenue recognition and mislead investors and other stakeholders. The allowance method, on the other hand, anticipates and records bad debt expenses before they actually occur, which better reflects the economic reality of the business's operations. Therefore, the allowance method is considered to be more accurate and reliable in preparing financial statements.

When Preparing Financial Statements, the Allowance Method Is Preferred Over