Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 33 - No. 44)
When using the allowance method, what is the balance of the allowance for doubtful accounts *before* a specific uncollectible account is written off?
It is zero.
It reflects the total amount of uncollectible debts.
It is an estimate of uncollectible accounts.
It reflects the balance of the accounts receivable.
Explanation
The allowance balance reflects the *estimated* amount of uncollectible accounts.
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