Allowance for Doubtful Accounts Is a Contra Asset; Its Balance

question 2

True/False

Allowance for Doubtful Accounts is a contra asset; its balance is added to Accounts receivable.

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Definitions:

Liabilities

Future sacrifices of economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or events.

Income Statement

A financial document that reports a company's financial performance over a specific period, detailing revenues, expenses, and net income or loss.

Common Stock

Common stock represents units of ownership in a corporation, granting holders voting rights and a share in the company's profits, often through dividends.

Ending Balance

The amount in an account at the end of an accounting period after all debits and credits have been accounted for.