The direct write-off method involves recording an adjustment at the end of each period to account for the possibility of future uncollectible accounts.The allowance method records an adjustment for future uncollectible accounts.

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The direct write-off method records bad debts only when they are actually confirmed as uncollectible, without estimating future bad debts. The allowance method, in contrast, involves recording an adjustment at the end of each period to estimate future uncollectible accounts.

The Direct Write-Off Method Involves Recording an Adjustment at the End