Which method is required by GAAP for accounting for uncollectible accounts?

The allowance method is required by Generally Accepted Accounting Principles (GAAP) for accounting for uncollectible accounts because it adheres to the matching principle. This principle states that expenses should be recognized in the same period as the revenues they help to generate. Under the allowance method, companies estimate the amount of accounts receivable that will ultimately be uncollectible and create an allowance for doubtful accounts. This allows them to recognize the potential loss in the same period in which the revenue is recorded, resulting in more accurate financial statements.

Using this method also provides a more realistic view of the company's financial position, as it presents a more accurate net realizable value for accounts receivable on the balance sheet. By periodically evaluating historical data and current economic conditions to adjust the allowance, businesses can make informed expectations about future collection difficulties.

This contrasts with the direct write-off method, which records bad debts only when they are specifically identified as uncollectible, impairing the matching principle and potentially leading to distorted financial statements. Other options, like the cash method and percentage method, do not reflect the requirements set by GAAP for uncollectible accounts. Thus, the allowance method is the appropriate and required approach in GAAP for accounting for uncollectible accounts.