PRC-1 · Chapter 10 · Question 13 of 100
How is the 'Allowance for doubtful debts' account classified in the ledger?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Contra-asset account
Explanation
The allowance for doubtful debts carries a credit balance and is presented in the statement of financial position as a deduction from Trade Receivables (an asset), making it a contra-asset account.
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