Final answer:
The allowance method is better for matching revenues with expenses compared to the direct write-off method because it aligns with the matching principle by estimating bad debts in the same period as related sales.
Step-by-step explanation:
The question pertains to whether the allowance method or the direct write-off method achieves better matching of revenues and expenses. The allowance method is preferable for matching revenues with expenses because it uses an allowance for doubtful accounts to estimate bad debts in the same period when the related sales occur. This approach adheres to the matching principle, which is a fundamental accounting concept that aims to match revenues with the expenses incurred to generate those revenues within the same accounting period.
By contrast, the direct write-off method records bad debt expenses only when specific accounts are deemed uncollectible, which may not necessarily occur in the same period when the relevant sales were made. This leads to a less precise matching of revenues and expenses, which can distort the understanding of a company's financial health during any given period.