Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.



Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Because the effect of the allowance for bad debts account is to reduce the balance of the company’s accounts receivable, it is known as a “[...].”
Answer
contra asset account

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Because the effect of the allowance for bad debts account is to reduce the balance of the company’s accounts receivable, it is known as a “[...].”
Answer
?

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
Because the effect of the allowance for bad debts account is to reduce the balance of the company’s accounts receivable, it is known as a “[...].”
Answer
contra asset account
If you want to change selection, open original toplevel document below and click on "Move attachment"

Parent (intermediate) annotation

Open it
an>The estimated uncollectible amount is recorded in an account called allowance for bad debts . Because the effect of the allowance for bad debts account is to reduce the balance of the company’s accounts receivable, it is known as a “contra asset account.”<span><body><html>

Original toplevel document

3.1. Financial Statement Elements and Accounts
ncial statements. The actual accounts used in a company’s accounting system will be set forth in a chart of accounts . Generally, the chart of accounts is far more detailed than the information presented in financial statements. <span>Certain accounts are used to offset other accounts. For example, a common asset account is accounts receivable, also known as “trade accounts receivable” or “trade receivables.” A company uses this account to record the amounts it is owed by its customers. In other words, sales made on credit are reflected in accounts receivable. In connection with its receivables, a company often expects some amount of uncollectible accounts and, therefore, records an estimate of the amount that may not be collected. The estimated uncollectible amount is recorded in an account called allowance for bad debts . Because the effect of the allowance for bad debts account is to reduce the balance of the company’s accounts receivable, it is known as a “contra asset account.” Any account that is offset or deducted from another account is called a “ contra account .” Common contra accounts include allowance for bad debts (an offset to accounts receivable for

Summary

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Details

No repetitions


Discussion

Do you want to join discussion? Click here to log in or create user.