Why Is the Allowance Method Preferred Over the Direct Write-Off

question 17

Multiple Choice

Why is the allowance method preferred over the direct write-off method of accounting for bad debts?

• A) Determining worthless accounts under direct write-off method is difficult to do.
• B) Improved matching of bad debt expense with revenue.
• C) Allowance method is used for tax purposes.
• D) Estimates are used.

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