The allowance method for estimating and reporting bad debt expense:

Question

Quizplus · Accepted Answer

The allowance method generally adheres to the matching principle better than the specific write-off method because it estimates and reports bad debt expense in the same period as the related sales revenue. Options A and B are incorrect because the full-disclosure principle and recognizing gains and losses on bad debts in the period of removal are not specific to the allowance method. Option C is incorrect because the allowance method is required under GAAP for all companies, not optional.

The Allowance Method for Estimating and Reporting Bad Debt Expense