The Allowance for Uncollectible Accounts Is a Contra-Asset Account

question 86

True/False

The Allowance for Uncollectible Accounts is a contra-asset account.

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Definitions:

Marginal Costs

The increase in expense associated with manufacturing an additional unit of a product or service.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because the negative consequences are borne by another party.

Coase Theorem

An economic theory that suggests that if trade in an externality is possible and there are no transaction costs, parties can negotiate solutions to conflict that lead to an efficient outcome regardless of the initial allocation of property.

Externalities

Economic side effects or by-products that affect an uninvolved third party; can be positive or negative.