The ledger accounts for accumulated depreciation and allowance for doubtful debts:
A) would normally hold credit balances.
B) would normally hold debit balances.
C) represent expenses.
D) represent liabilities.

Question

Quizplus · Accepted Answer

The accumulated depreciation and allowance for doubtful debts accounts are both contra accounts to their respective asset accounts (such as Property, Plant, and Equipment, and Accounts Receivable). Therefore, they would normally hold credit balances. The purpose of these accounts is to reduce the carrying value of these assets to their net book value on the balance sheet. They represent a reduction in value, and therefore, they are not expenses or liabilities in and of themselves.

The Ledger Accounts for Accumulated Depreciation and Allowance for Doubtful