The direct charge-off method of recognizing uncollectible accounts is not in accordance with good accounting practice.

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Under the direct charge-off method, uncollectible accounts are simply written off as an expense when they are determined to be uncollectible. This method does not match the expenses with the revenues in the same period and can result in inaccurate financial statements. The allowance method, which estimates the amount of uncollectible accounts and records an expense in the same period as the related revenue, is considered a better accounting practice.

The Direct Charge-Off Method of Recognizing Uncollectible Accounts Is Not