Chapter 67 Saved Allowance for Doubtful Accounts is a c

?? ???? ?? ?? ?? Chapter 6&7) Saved Allowance for Doubtful Accounts is a contra asset; its balance is added to Accounts receivable. True or False 7:09 True False

Solution

FALSE

A normal asset account includes a debit balance, while a contra asset account includes a credit balance. Therefore, a contra asset can be regarded as a negative asset account. Offsetting the asset account with its respective contra asset account shows the net balance of that asset.

So allowance for doubtful accounts will be deducted from Accounts receivable