Answer:
Allowance for doubtful accounts is a contra asset account that is used to reduce the value of a company's accounts receivable to reflect the estimated amount of uncollectible debts. The account is typically created through an adjusting entry at the end of an accounting period and is based on a company's historical experience and an assessment of current economic conditions. By recording an allowance for doubtful accounts, a company can more accurately represent the value of its accounts receivable on its balance sheet and reduce the risk of overstating its assets or income. The balance in the allowance for doubtful accounts account is deducted from the total accounts receivable to give the net realizable value of accounts receivable.