One might infer from a debit balance in Allowance for Doubtful Accounts that
A)a posting error has been made.
B)more accounts have been written off than have been estimated uncollectible.
C)the percentage of receivables basis is being used.
D)bad debts expense has been overestimated.

Question

Quizplus · Accepted Answer

A debit balance in the Allowance for Doubtful Accounts indicates that actual bad debts (accounts written off) exceeded the initial estimate of uncollectible accounts. This situation does not necessarily imply a posting error, the use of a specific accounting method, or an overestimation of bad debts expense initially; it simply means that the actual losses from uncollectible accounts were higher than anticipated.

One Might Infer from a Debit Balance in Allowance for Doubtful