What is the type of account and normal balance of Allowance for Doubtful Accounts?
A) Contra asset,credit
B) Asset,debit
C) Liability,credit
D) Contra asset,debit

Question

Quizplus · Accepted Answer

Allowance for Doubtful Accounts is a contra asset account, meaning it has a credit balance. This account is used to offset the accounts receivable account and estimate the amount of doubtful debts that the company expects to not be able to collect. As a result, when the allowance for doubtful accounts increases (more doubtful debts are estimated), the credit balance increases, and when it decreases (doubtful debts are recovered), the credit balance decreases.

What Is the Type of Account and Normal Balance of Allowance