What is the appropriate account to credit when estimating a portion of health care organization receivables that will prove to be uncollectible?

Question

Quizplus · Accepted Answer

When estimating a portion of healthcare organization receivables that will prove to be uncollectible, the appropriate account to credit is the allowance for uncollectible accounts. This is because the allowance account allows for an estimate of the amount of receivables that will be uncollectible in the future. By crediting this account, the organization is reducing the total amount of receivables they expect to collect. Bad debt expense is used to record the actual write-offs of uncollectible accounts, and contractual adjustments account for the difference between what the healthcare organization charges and what their contracted rates allow for. Patient service revenues and accounts receivable are not the appropriate accounts to credit in this scenario.

What Is the Appropriate Account to Credit When Estimating a Portion