GAAP requires most companies to use the ________.

Question

Quizplus · Accepted Answer

GAAP requires companies to use the allowance method to estimate bad debts because it is a more conservative approach that matches the expense to the revenue earned in the same accounting period. The direct write-off method is not allowed under GAAP as it doesn't match the expense to the revenue earned, and the amortization method is not relevant for estimating bad debts. The 360-day method is not a method for estimating bad debts.

GAAP Requires Most Companies to Use the ________