Money a customer owes after a number of months have passed with no payment.

Money a customer owes after a number of months have passed with no payment.

• A. Accounts receivable
• B. Accounts payable
• C. Doubtful accounts
• D. Accounts uncollectible

Answer: (C)

When customers don’t pay for an extended period, the business must assess whether those receivables will likely be collected. Those that are unlikely to be collected are labeled doubtful accounts, and an allowance for doubtful accounts is established to reflect the expected losses. This distinction explains why the correct term is used: it specifically refers to receivables that are becoming questionable and may be written off. Accounts receivable is the broader asset showing money owed, not necessarily uncollectible. Accounts payable is something the company owes to others, not money owed to the company. “Accounts uncollectible” is not the standard term used in accounting; the formal label is doubtful accounts.

When customers don’t pay for an extended period, the business must assess whether those receivables will likely be collected. Those that are unlikely to be collected are labeled doubtful accounts, and an allowance for doubtful accounts is established to reflect the expected losses. This distinction explains why the correct term is used: it specifically refers to receivables that are becoming questionable and may be written off. Accounts receivable is the broader asset showing money owed, not necessarily uncollectible. Accounts payable is something the company owes to others, not money owed to the company. “Accounts uncollectible” is not the standard term used in accounting; the formal label is doubtful accounts.