The most acceptable way to measure bad debts is by:

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The most acceptable way to measure bad debts is through the allowance method, which involves estimating the amount of accounts receivable that are unlikely to be collected and creating a corresponding allowance for doubtful accounts. This method conforms to the matching principle and the conservatism principle of accounting, as it matches the anticipated losses with the anticipated revenues and recognizes losses as soon as they are reasonably estimated. The direct write-off method, in contrast, is not considered acceptable under generally accepted accounting principles (GAAP) as it violates the matching principle and may distort the true financial position of the business. The percent-of-sales method is also not considered acceptable as it relies on a broad generalization of bad debt as a percentage of sales, which does not reflect the specific circumstances and risks of individual customers and transactions.

The Most Acceptable Way to Measure Bad Debts Is By