The allowance method is a method of recording collection losses by estimating uncollectable amounts.

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Quizplus · Accepted Answer

The allowance method is used to estimate and record collection losses by determining uncollectable amounts. This method involves creating a contra-asset account called "Allowance for Doubtful Accounts" to offset the accounts receivable balance and reflects the estimated amount of uncollectable accounts. Therefore, the statement is true.

The Allowance Method Is a Method of Recording Collection Losses