The balance in Allowance for Doubtful Accounts will directly impact the end of period adjustment for the bad debt expense when using which of the following methods?
A) Allowance method
B) Direct write-off method
C) Accrual method
D) declining value method

Question

Quizplus · Accepted Answer

The allowance method is the only method listed that uses an Allowance for Doubtful Accounts account. The balance in this account reflects the estimated amount of bad debt that is expected to be incurred. At the end of the period, the balance in this account is adjusted to reflect the actual amount of bad debt that occurred during the period. This adjustment is recorded as an expense, so the balance in the Allowance for Doubtful Accounts directly impacts the end of period adjustment for bad debt expense. The other methods listed - Direct write-off method, Accrual method, declining value method - do not use an allowance account and do not involve this type of adjustment.

The Balance in Allowance for Doubtful Accounts Will Directly Impact