Allowance for Doubtful Accounts Is Classified as a (N) ______

question 54

Multiple Choice

Allowance for Doubtful Accounts is classified as a (n) ______ account and has a normal ______ balance.​

• A) owner's equity, credit
• B) contra asset, debit
• C) owner's equity, debit
• D) contra asset, credit

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Definitions:

Credit Checks

A review of an individual's or company's financial history, often performed by a lender or financial institution, to assess the risk of lending money or extending credit.

Interest-bearing Asset

A type of investment that earns interest over time, such as savings accounts, certificates of deposit, and bonds.

Default Risk

The risk that a borrower will not make the required payments on a debt.

Trade Credit

An arrangement where a buyer can purchase goods on account without paying cash upfront, with payment to the seller due at a later date.