The Allowance for Doubtful Accounts represents:

Question

Quizplus · Accepted Answer

The Allowance for Doubtful Accounts represents the estimated amount of uncollectible accounts receivable. It is the difference between the recorded value of accounts receivable and the net realizable value of accounts receivable, which is the amount that the company expects to collect. Option A is incorrect because Bad debt losses incurred in the current period are expensed and reduce net income. Option B is incorrect because the amount of uncollected accounts written off to date would be reflected in the balance of Accounts Receivable, not the Allowance for Doubtful Accounts. Option C is incorrect because it does not accurately reflect the purpose of the Allowance for Doubtful Accounts.

The Allowance for Doubtful Accounts Represents