Accounting for IGCSE & O level - Final Statements (Section 12 - No. 44)
What is the purpose of the 'Allowance for Doubtful Accounts'?
To increase sales revenue.
To estimate the amount of uncollectible accounts receivable.
To decrease the company's expenses.
To show the cash available in the bank.
Explication
The Allowance for Doubtful Accounts is used to estimate the amount of accounts receivable that may not be collected.