Which of the following statements is true regarding the direct method?

The statement that records bad debt expense as specific accounts become uncollectible accurately describes the direct method for bad debt accounting. This approach directly identifies and writes off specific accounts that are deemed uncollectible, reflecting an actual loss when it is recognized. This method contrasts with the allowance method, which estimates potential bad debts based on historical trends without identifying specific uncollectible accounts at the outset.

Using the direct method provides a straightforward way to manage accounts receivable by addressing actual occurrences rather than relying on estimates or projections. Consequently, once an account is deemed uncollectible (following attempts to collect), it is directly written off, thereby making the financial statements reflect the reality of the company's financial position more clearly. This method is particularly useful for smaller businesses that might not have a large volume of receivables, as it simplifies the accounting process by not requiring complex estimates or adjustments.