A major purpose of using an Allowance for Doubtful Accounts is to recognize uncollectible accounts expense in the same accounting period as the related sales that caused the expense.

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The use of Allowance for Doubtful Accounts ensures that an estimate for uncollectible accounts is recognized in the same accounting period as the sales that generated the accounts receivable. This allows for more accurate matching of expenses to revenue and better financial reporting.

A Major Purpose of Using an Allowance for Doubtful Accounts