One disadvantage of the allowance method (over the direct write-off method)for recording uncollectible accounts is that it generally matches bad debt expense with the revenue it helped to generate.This is generally an advantage of the allowance method.

Question

Quizplus · Accepted Answer

This statement is incorrect, as matching bad debt expense with the revenue it helped to generate is actually an advantage of the allowance method, not a disadvantage. The disadvantage of the allowance method is that it requires estimation and may result in under or overestimation of bad debt expense.

One Disadvantage of the Allowance Method (Over the Direct Write-Off