Which Statement Concerning the Allowance for Doubtful Debts Account Is

question 4

Multiple Choice

Which statement concerning the allowance for doubtful debts account is not true?

• A) Allowance for doubtful debts normally has a credit balance.
• B) Allowance for doubtful debts is used to adjust receivables for estimated bad debts because individual debtor's balances cannot be removed from the ledger unless there is indisputable evidence they are bad.
• C) Allowance for doubtful debts is a contra-asset account designed to reduce receivables to estimated realisable value.
• D) Allowance for doubtful debts represents cash set aside to cover losses incurred as a consequence of customers being declared bankrupt.

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