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 had been estimated.
C)bad debts expense has been overestimated.
D)the percentage of receivables basis is being used.

Question

Quizplus · Accepted Answer

A debit balance in Allowance for Doubtful Accounts means that more accounts have been written off than had been estimated. This indicates that the company is being more conservative in their estimation of bad debt expenses, and is taking a larger amount of accounts receivable off their books as uncollectible.

One Might Infer from a Debit Balance in Allowance for Doubtful