What is the relationship between accounts receivable and the allowance for doubtful accounts?

• A. The allowance for doubtful accounts increases the gross accounts receivable.
• B. The allowance for doubtful accounts has no impact on accounts receivable.
• C. The allowance for doubtful accounts is an asset account that increases net accounts receivable.
• D. The allowance for doubtful accounts is a contra asset account that reduces the net accounts receivable.

Answer: (D)