Why Is Allowance For Uncollectible Accounts Called A Contra Asset Account
Why Is Allowance For Uncollectible Accounts Called A Contra Account / Is Allowance For Uncollectible Accounts (Allowane For Doubtful Accounts) Called A Contra Asset Account Or Not? As Allowance for Uncollectible Accounts or Allowance for Doubtful Accounts reduces the balance of Accounts Receivable , so it is called a Contra Asset Account in Accounting. An allowance for uncollectible accounts or allowance for doubtful accounts is the estimated value of uncollectible accounts that a business may not collect from customers in future. After deducting the value of allowance for uncollectible accounts from the ending balance of accounts receivable, we get the Book Value or Net Realizable Value of Accounts Receivable and it is such a value at which the company or corporation is exptecting to receive from customers in future. The normal balance of allowance for uncollectible accounts is credit while the normal balance of accounts receivable is debit. So, allowance for uncollec...