After adjustment, the balance in the Allowance for Doubtful Accounts has the effect of reducing Accounts Receivable to its estimated realizable value.

Question

Quizplus · Accepted Answer

This statement is true. The Allowance for Doubtful Accounts is a contra account that offsets the Accounts Receivable account. By adjusting the balance of the Allowance for Doubtful Accounts, the amount of Accounts Receivable is reduced to its estimated realizable value, which reflects the amount of receivables that the company expects to collect.

After Adjustment, the Balance in the Allowance for Doubtful Accounts