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What type of account is Allowance for Bad Debts?


Answered 8 months ago
Answered 8 months ago

Allowance for bad debts is a contra asset of Accounts Receivable. This means that it reduces the total amount of Account Receivable and is reported under the current asset on the Balance Sheet.

Allowance for Bad Debts, also called Allowance for Doubtful Accounts or Bad Debt Reserve, is an account set up to estimate the amount of receivables that the firm may no longer collect."

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