Allowance for Doubtful Accounts is
A)deducted from Sales in the Revenue section of the income statement.
B)listed in the Operating Expenses section of the income statement.
C)subtracted from Accounts Receivable in the Asset section of the balance sheet.
D)added to Accounts Receivable in the Assets section of the balance sheet.

Question

Quizplus · Accepted Answer

Allowance for Doubtful Accounts is a contra asset account that is subtracted from the Accounts Receivable in the Asset section of the balance sheet. This allowance is created to estimate the amount of accounts that are unlikely to be collected, and thus, reduce the value of accounts receivable. It is not included in the revenue section of the income statement or listed as an operating expense.

Allowance for Doubtful Accounts Is