One might infer from a debit balance in Allowance for Doubtful Accounts that
A)a posting error has been made.
B)more accounts have been written off than had been estimated would be uncollectible.
C)the percentage of receivables basis is being used.
D)bad debts expense has been overestimated.

Question

Quizplus · Accepted Answer

A debit balance in Allowance for Doubtful Accounts means that more accounts have been written off than had been estimated would be uncollectible. This suggests that the company has had more bad debts than expected, resulting in a higher debit balance in the allowance account.

One Might Infer from a Debit Balance in Allowance for Doubtful