Direct Charge-off Accounting Method Law and Legal Definition

Direct charge-off accounting method means an accounting method for uncollectible accounts whereby a deduction for bad debts are allowed on an account becoming partially or completely worthless. This method is based on facts instead of on estimates and it is not generally acceptable for financial reporting purposes.. It is often distinguished from the allowance method, which accounts for uncollectible accounts by expensing estimates of uncollectible accounts in the period when the related sales occurs. It is also called as direct write off method.