The balance of the allowance for doubtful accounts is deducted from accounts receivable on the balance sheet.

Question

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The allowance for doubtful accounts is a contra asset account that is used to reduce the accounts receivable balance to its estimated net realizable value by deducting the amount of doubtful accounts that are expected to become uncollectible. This deduction is reflected on the balance sheet as a reduction in accounts receivable. Therefore, the statement is true.

The Balance of the Allowance for Doubtful Accounts Is Deducted