9. Allowance for Doubtful Accounts will appear on the balance sheet as a:a. a contra asset.b. a contra liabilityc. a liability.d. part of the owner’s capital

Answered: Allowance for Doubtful Accounts will…

Allowance for Doubtful Accounts will appear on the balance sheet as a. a contra asset. a. a contra asset. b. a contra liability c. a liability. d. part of the owner's capital

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

9. Allowance for Doubtful Accounts will appear on the balance sheet as a:

a. a contra asset.

b. a contra liability

c. a liability.

d. part of the owner’s capital

Expert Solution

Step 1

Allowance for doubtful accounts is prepared for the estimated uncollectible accounts in the future.

It is made in accordance with the conservatism/prudence concept.

The balance of the allowance for doubtful accounts is deducted from the accounts receivable to calculate the net accounts receivable.

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