GAAP requires most companies to use the:

Question

Quizplus · Accepted Answer

GAAP requires companies to use the allowance method to evaluate bad debts as it is a more accurate and conservative approach compared to the direct write-off method. The allowance method estimates the amount of potential bad debts and creates a reserve account to offset the losses, while the direct write-off method only recognizes bad debts when they are deemed uncollectible. The other options (amortization method and 360-day method) are not relevant to bad debt evaluation.

GAAP Requires Most Companies to Use The