The account "Allowance for Uncollectible Accounts" is classified as a (n):

A. Expense in the income statement.

B. Contra asset to accounts receivable in the balance sheet.

C. Contra revenue to credit sales in the income statement.

D. Liability account in the balance sheet.

The correct option is B. The account "Allowance for Uncollectible Accounts" is classified as a (n) contra asset to accounts receivable in the balance sheet.

Explanation

Customers often pay for a specific product through credit. If the customer does not pay the bill or doesn't have money in the account, then the company enters this amount as uncollectible. This is often referred to as allowance for uncollectible accounts. It is a contra asset account that shows the amount of money a company does not expect to get, on a balance sheet. It is also referred as Allowance for doubtful accounts.