What is debtors allowances classified as?
submitted by Mia

Jimbo

I'd classify debtors allowances as a reduction of accounts receivable. In that case, it would be recorded as a contra-revenue account on the income statement.

A debtors allowance is the amount you'd set aside for customer returns and discounts. It's a good idea, because you'll have discrepancies in orders and the occasional damaged goods. When you have to use those funds you've set aside, they'll decrease the total receivables on the balance sheet.

Yuri

A debtor's allowance is considered a deduction from the total amount owed by customers. So, in accounting terms, that would have to be classified as a contra-asset account to accounts receivable. It would reduce the total receivables because the customer owes less.