Discuss the two methods for recording bad debt expense. What type of company uses each method?

The first method is the direct write-off method. Under this method, bad debt expense is recorded only when an account is deemed uncollectible. This method is most often used by small companies and those with few receivables.The second method is the allowance method. Under this method, bad debt expense is recorded by estimating bad debts at the end of the accounting period. Companies that have a large amount of receivables are required to use this method under generally accepted accounting principles (GAAP).