Allowance Method (Balance Sheet Method) Definition | Becker

Accounting Dictionary

Allowance Method (Balance Sheet Method)

Under the allowance method of accounting for bad debts, an estimate is made of the accounts receivable that will be written off and that amount is charged to bad debts expense for the period. The allowance method is GAAP because it matches the bad debts expense to the sales revenue that generated it. See also direct write-off method and bad debt expense.

Related Terms:

Direct Write-off Method [FAR]Bad Debt Expense [FAR]Back to Dictionary

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