A major advantage of the "direct write-off method" over the allowance method of accounting for bad debts is better matching of revenues and expenses.

Question

Quizplus · Accepted Answer

The direct write-off method does not match revenues and expenses as it only recognizes bad debts when they occur. The allowance method, on the other hand, estimates and matches the anticipated bad debts with revenues in the same accounting period.

A Major Advantage of the "Direct Write-Off Method" Over the Allowance