allowance method

allowance method definition - finance
A method of writing off bad debts in which uncollectible accounts are expensed in the period when the related sales take place. The allowance method contrasts with the direct charge-off method, which directly debits an expense account when bad debts are discovered.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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