I just wanted to confirm

The ADA account is a Balance Sheet account, so at year end it doesn't close to RE like an income statement (P/L) account

The question is: what type of balances does the ADA account contain,
1) current year
2) prior years
3) current and prior years

I am thinking it's #3 since it's a BS account and it doesn't close,

Can someone clarify

Thank-you
Raymond

It might help if you could clarify what ADA stands for. (Sometimes abbreviations are not consistent from class to class, from school to school, or from region to region. I notice you're in Canada so it might be a Canadian thing.)

But as long as it's just a regular account... You're saying it's a balance sheet account. Anything listed on the balance sheet does not close. (Revenues, expenses and dividends close. Dividends are equity, but they aren't on the balance sheet cause they've been closed to RE.)

But the question actually would seem to me to have nothing to do with whether it closes or not. An account that closes wouldn't have any balance in it at all. So that's irrelevant.

I find the question a bit confusing, but I think that is because you have added extra information that may not be relevant to the question. (i.e. making my mind go somewhere it shouldn't -- i.e. what's closing or not have to do with it?) It almost seems too easy and makes me suspicious it's a trick question, so I keep wondering what the "trick" is. (Yes, us non-students can think that way too. LOL.)

At any given time, the balance in the account is the current balance. At year-end, the balance in the account is still the current balance, which is an ending balance. If the accounts contain only current year transactions, then an account would contain a beginning balance (which is the same as last year's ending balance), plus this year's transactions, and then this year's ending balance. When computerized, this is the way it usually is. I don't know why any account would still have balances from prior years in them.

Of course, I still don't know what ADA stands for, but I still don't know why any account should contain prior year balances in them. The balance of the account is the accumulation of many entries that have been made, even for many, many years. But the question is asking about the balance, not transactions.

Oh ada is allowance for doubtful accounts,

It's the balances in this account.

I don't recall the question completely but it's as much as I can remember

At year end, I should have added that, the balance in the allowance for doubtful account does it consist of

Current year transactions, prior year transaction, or both

Hope that clarifies the question

Thank-you
Raymond

OK, I've not seen that abbreviation used. And it really didn't matter.

If it's asking what transactions it includes, that changes everything. And, it now makes closing relevant. If you close an account, that balance you're closing only contains this year's transactions. Because you close it and it nets back to zero and starts over.

An account that is not closed basically contains every transaction that ever existed. (It doesn't show up currently, but you carry that balance forward every year, and it contains everything that happened prior to that date. Etc.) It's like your checkbook. Whatever balance you have in there is the net of every transaction you have ever put through it. You started with nothing, you made a deposit, you wrote checks, made a deposit, wrote more checks, and somewhere down the line you ended up with the balance you have right now. If you changed one thing you did 10 years ago, it would change the balance you have in there today.

Much apperciated,

I am trying to recall the exact question since it was from an exam and I don't have access to the exam or instructors anymore

Thank-you
Raymond