Final answer:
The allowance method is used to adjust accounts receivable on the balance sheet to their net realizable value by estimating and recording an allowance for doubtful accounts.
Step-by-step explanation:
The allowance method of accounting for uncollectible accounts is a technique used to provide a more accurate reflection of the realizable value of outstanding receivables. Specifically, it impacts the balance sheet by adjusting the accounts receivable to their net realizable value. Under this method, companies estimate the amount of receivables that may not be collected in the future and record an allowance for doubtful accounts as a contra account to receivables. This allows the company to anticipate losses from uncollectible accounts rather than waiting for an account to be confirmed as uncollectible, which may affect the income statement through bad debt expense, but the direct aim is to address the valuation of assets on the balance sheet.