Which of the following accounts would not be considered a reserve account?
A) Allowance for Doubtful Accounts
B) Estimated Warranty Liability
C) Prepaid Expense
D) Accumulated Depreciation

Question

Quizplus · Accepted Answer

Prepaid expenses are not considered reserve accounts. Reserve accounts are created for potential future expenses or losses, while prepaid expenses are payments made in advance for goods or services. Choices A, B, and D are all reserve accounts. Allowance for Doubtful Accounts is created to account for potential bad debt losses, Estimated Warranty Liability is created for potential warranty claims, and Accumulated Depreciation is created to account for the depreciation of assets over time.

Which of the Following Accounts Would Not Be Considered a Reserve