The allowance for doubtful accounts is an example of a(n)
A) expense account.
B) contra account.
C) adjunct account.
D) control account.

Question

Quizplus · Accepted Answer

The allowance for doubtful accounts is a contra account because it is used to reduce the balance of the accounts receivable account. It represents the estimated amount of accounts receivable that may not be collected due to credit risks or other factors. As a contra account, it has a credit balance that is deducted from the debit balance of accounts receivable to arrive at the net realizable value.

The Allowance for Doubtful Accounts Is an Example of A(n)