Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Adjusting Entries

The journal entries that bring the accounts up to date at the end of the accounting period.

Accounting Period

A specific time period in which all financial transactions are recorded and financial statements are prepared.

Allowance

An accounting adjustment for accounts receivable, representing a reduction in the amount expected to be received due to potential uncollectible debts.