The Allowance for Doubtful Accounts Account Is a Contra-Account That

question 86

Multiple Choice

The Allowance for Doubtful Accounts account is a contra-account that offsets:

• A)Bad Debt Expense.
• B)Cash.
• C)Net Income.
• D)Accounts Receivable.

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Definitions:

Discount on Bonds Payable

The gap between what a bond is actually worth and the price at which it is sold, in cases where it sells for less than its stated value.

Bonds Payable

This term refers to the amount of money a company owes to bondholders at the end of an accounting period, representing a long-term liability.

Present Value

The present valuation of money to be received in the future or recurrent cash inflows, accounting for a chosen rate of interest.

Compounded Annually

Interest on an investment or loan calculated once a year, where each year's interest payment includes interest on the original principal and on the accumulated interest of previous periods.