On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the
A) Uncollectible accounts expense for the year
B) total of the accounts receivables written-off during the year
C) total estimated uncollectible accounts as of the end of the year
D) sum of all accounts that are past due.

Question

Quizplus · Accepted Answer

The Allowance for Doubtful Accounts is a contra asset account that represents the estimated amount of accounts receivable that are expected to be uncollectible at the end of the year. This estimate is based on historical collection patterns and other factors such as economic conditions and specific customer circumstances. Therefore, the amount shown for the Allowance for Doubtful Accounts is equal to the total estimated uncollectible accounts as of the end of the year. Option A is incorrect because the uncollectible accounts expense represents the amount of bad debt written off during the year, not the estimate of uncollectible accounts. Option B is incorrect because the total of the accounts receivables written-off during the year would be shown in the income statement, not the balance sheet. Option D is incorrect because the allowance is based on estimates and not on the sum of past due accounts.

On the Balance Sheet, the Amount Shown for the Allowance