Asked by Spencer Hamer- on Jun 11, 2024
Verified
Allowance for Doubtful Accounts is classified as a (n) ______ account and has a normal ______ balance.
A) owner's equity, credit
B) contra asset, debit
C) owner's equity, debit
D) contra asset, credit
Allowance for Doubtful Accounts
A contra-asset account on a company's balance sheet that represents the amount of receivables the company expects may not be collected due to customer defaults.
Contra Asset
An account listed in a company's balance sheet that is used to reduce the balance of a related asset account, showing the amount that effectively reduces the original asset's value.
- Understand the impact of the allowance method on financial statements.
- Understand the classification and treatment of Allowance for Doubtful Accounts.
Verified Answer
Learning Objectives
- Understand the impact of the allowance method on financial statements.
- Understand the classification and treatment of Allowance for Doubtful Accounts.
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