The direct write-off method for accounting for bad debts is preferred over the allowance for doubtful debts method, as the latter creates a negative or contra asset which is not considered a 'real' account under accrual accounting.

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The direct write-off method is less preferred than the allowance for doubtful debts method as the latter provides a more accurate estimate of potential bad debts and creates a contra asset account that is recognized under accrual accounting.

The Direct Write-Off Method for Accounting for Bad Debts Is