What is the normal balance of allowance for doubtful accounts?
Understand the Problem
The question is asking about the accounting concept of allowance for doubtful accounts, specifically what the normal balance of this account is, which pertains to financial reporting and accounting practices.
Answer
Credit
The final answer is that the normal balance of Allowance for Doubtful Accounts is a credit.
Answer for screen readers
The final answer is that the normal balance of Allowance for Doubtful Accounts is a credit.
More Information
The Allowance for Doubtful Accounts is a contra asset account, meaning it offsets the accounts receivable balance. As a contra asset, it typically has a credit balance.
Tips
A common mistake is to think that all asset-related accounts have a debit balance. Contra asset accounts like Allowance for Doubtful Accounts have credit balances.
Sources
- Allowance for Doubtful Accounts - Investopedia - investopedia.com
- What is the type of account and normal balance of Allowance for ... - Study.com - homework.study.com
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