It is possible for the allowance for doubtful accounts to have a debit or credit balance prior to the year-end adjustment.

Question

Quizplus · Accepted Answer

The allowance for doubtful accounts is a contra asset account which means it has an opposite balance to the accounts receivable account. It is possible for the allowance account to have a debit or credit balance depending on the amount of estimated uncollectible accounts and the actual write-offs during the accounting period. If the estimated uncollectible accounts are greater than the actual write-offs, the allowance account will have a debit balance. If the actual write-offs are greater than the estimated uncollectible accounts, the allowance account will have a credit balance.

It Is Possible for the Allowance for Doubtful Accounts to Have