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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which one of the following is NOT an accurate description of the Allowance for Doubtful Accounts?

It represents the estimated amount of accounts receivable that may not be collected.

It is used to match bad debt expense to the period in which related sales are made.

It is reported as a liability on the balance sheet.

It is a contra-asset account that reduces accounts receivable on the balance sheet.

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the concept of Allowance for Doubtful Accounts. It is a contra-asset account used to estimate the portion of accounts receivable that may not be collected due to customers' inability to pay.

Step 2: Review the purpose of the Allowance for Doubtful Accounts. It helps match bad debt expense to the period in which the related sales are made, adhering to the matching principle in accounting.

Step 3: Analyze how the Allowance for Doubtful Accounts is reported on the balance sheet. It is not reported as a liability; instead, it is a contra-asset account that reduces the accounts receivable balance.

Step 4: Compare the descriptions provided in the problem. Identify which statement does not accurately describe the Allowance for Doubtful Accounts based on the explanation above.

Step 5: Conclude that the statement 'It is reported as a liability on the balance sheet' is incorrect because the Allowance for Doubtful Accounts is a contra-asset account, not a liability.