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there are times when a creditor does not receive full payment for the amount to borrow arose this results in the need to write off a debtors account either wholly or in part writing off a bad debt simply means to recognize a loss because a portion of a receivable didnamp;#39;t materialize there are two ways to write off on collectible accounts the allowance method and the direct write-off method only the allowance method is in compliance with GAAP in the direct write-off method a company waits until an account proves to be uncollectible before it reports the bet that expense and reduces accounts receivable imagine that a customer who owes a company money files for bankruptcy and is discharged of its indebtedness towards the company when the customer receives the discharge order the company knows the customer will no longer pay the receivable do and therefore bet that expense is recorded and the accounts receivable balance is reduced ingly suppose that Fusco Bodyworks sells aut
