Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Net Accounts Receivable: Allowance for Doubtful Accounts

Financial Accounting

7. Receivables and Investments

Net Accounts Receivable: Allowance for Doubtful Accounts

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Multiple Choice

The allowance for uncollectible accounts is a contra account to which of the following?

Accounts Receivable

Sales Revenue

Inventory

Notes Payable

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Verified step by step guidance

Understand the concept of a contra account: A contra account is an account that reduces the balance of a related account. It is used to reflect adjustments or deductions from the main account's value.

Identify the purpose of the allowance for uncollectible accounts: This account is used to estimate and record the portion of accounts receivable that is expected to be uncollectible due to customers failing to pay their debts.

Determine the related account: Since the allowance for uncollectible accounts is used to adjust the value of accounts receivable, it is a contra account to accounts receivable. This means it reduces the reported value of accounts receivable on the balance sheet.

Eliminate unrelated options: Sales Revenue, Inventory, and Notes Payable are not directly related to the allowance for uncollectible accounts. These accounts serve different purposes and are not adjusted by this contra account.

Conclude the relationship: The allowance for uncollectible accounts is specifically a contra account to Accounts Receivable, as it adjusts the net realizable value of receivables on the financial statements.