What does allowance method mean?

allowance method meaning in Law Dictionary

When a rule is made to protect debts with a percent of profits. Any reduction or excess within the next period will looked after next period. Others technique is named direct write off strategy.

allowance method meaning in Business Dictionary

Accounting technique by which a provision is good for expected debt in an accounting period by putting away a certain percentage of complete sales income. Any excess or shortfall of this amount (as resistant to the actual uncollectible amount) is adjusted when you look at the following accounting duration. It is among two these types of techniques; one other is called direct write off technique. Also called allowance for money owed.