Asked by Kayla Lippoldt on Jul 27, 2024
Verified
Which of the following is not true about the Allowance for Doubtful Accounts?
A) It is a contra asset account.
B) It is used instead of reducing accounts receivable directly.
C) It is debited when uncollectible accounts are written off.
D) It is a liability account.
E) It is credited when bad debts expense is estimated and recorded.
Contra Asset Account
An account on a company's balance sheet representing deductions from the gross amount of an asset, such as accumulated depreciation on fixed assets.
Allowance for Doubtful Accounts
An accounting method used to estimate the portion of a company's receivables that may not be collected, reducing the accounts receivable balance accordingly.
Uncollectible Accounts
Uncollectible accounts are receivables that a company deems uncollectable and likely will not be recovered, often written off as a bad debt expense.
- Describe and apply the concept of the Allowance for Doubtful Accounts.
Verified Answer
Learning Objectives
- Describe and apply the concept of the Allowance for Doubtful Accounts.
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