An allowance for doubtful accounts is a contra-account that offsets:
A)bad debt expense.
B)cash.
C)net income.
D)accounts receivable.

Question

Quizplus · Accepted Answer

The allowance for doubtful accounts is a reserve account that is used to offset accounts receivable in the balance sheet. This account is set up to estimate and record the amount of bad debt that is expected to occur in the future, so it helps to reduce the carrying value of accounts receivable to their estimated net realizable value. This account is not directly related to bad debt expense or cash, but it indirectly affects net income through the reduction in accounts receivable.

An Allowance for Doubtful Accounts Is a Contra-Account That Offsets