In accordance with generally accepted accounting principles, JKL Manufacturing Corporation uses the reserve method of accounting for bad debts for financial accounting purposes.JKL also must use this method for tax purposes.

Question

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For tax purposes, companies are generally required to use the specific charge-off method rather than the reserve method. The IRS does not allow the use of the reserve method for tax purposes because it wants to ensure that deductions for bad debts are only taken when specific debts are actually identified as uncollectible.

In Accordance with Generally Accepted Accounting Principles, JKL Manufacturing Corporation