Although Allowance for Doubtful Accounts Normally Has a Credit Balance

question 40

True/False

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

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Definitions:

Insured

A person or entity covered under an insurance policy to receive compensation for losses or damages.

Insurable Interest

The stake in the value of an item, life, or event for which an insurance policy is purchased to mitigate the risk of loss.

Creditor

An individual or entity to whom money is owed by a debtor.

Security Interest

A legal claim on assets granted to a creditor to secure a debt or obligation, providing the right to take property upon failure to repay.