The direct write-off method and the allowance method are methods used to adjust the balance in accounts receivable to reflect uncollectible accounts.

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Both the direct write-off method and the allowance method are used to adjust the balance in accounts receivable for uncollectible accounts. The direct write-off method involves recognizing a bad debt expense and directly reducing the accounts receivable balance when an account is determined to be uncollectible. The allowance method involves estimating the amount of uncollectible accounts and creating a contra-asset account, the allowance for doubtful accounts, to reduce the accounts receivable balance by that estimated amount.

The Direct Write-Off Method and the Allowance Method Are Methods