The use of the allowance for doubtful accounts results in the bad debt expense being charged to the period of sale.

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The allowance for doubtful accounts is a contra asset account that is used to estimate and account for the portion of accounts receivable that may not be collected. By using this allowance, the bad debt expense can be recognized and charged to the period in which the related sales were made. This is done in accordance with the matching principle of accounting, which requires that expenses be recognized in the same period as the related revenues. Thus, the use of the allowance for doubtful accounts is an important tool for accurately reporting bad debt expenses and ensuring that they are properly matched with the period of sale.

The Use of the Allowance for Doubtful Accounts Results in the Bad