Is Allowance for Uncollectable Accounts ADA

The Allowance for Doubtful Accounts (ADA) is a financial provision that represents the estimated amount of accounts receivable that may not be collected. It is recorded as a contra-asset account on the balance sheet, reducing the total amount of accounts receivable to reflect a more accurate valuation. ADA is crucial for financial reporting to ensure that the reported assets are not overstated due to potential losses from non-payment by customers.