The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts
A) is relevant when using the percentage of receivables basis.
B) is relevant when using the percentage of sales basis.
C) is relevant to both bases of adjusting for uncollectible accounts.
D) will never show a debit balance at this stage in the accounting cycle.

Question

Quizplus · Accepted Answer

The balance of Allowance for Doubtful Accounts is relevant when using the percentage of receivables basis because this method focuses on the desired balance in the allowance account after adjustments, taking into account the existing balance before making the adjustment.

The Balance of Allowance for Doubtful Accounts Prior to Making