An example of a reclassification entry would be an entry:
A) to reduce inventory when client failed to write down its obsolete raw materials.
B) to increase the income tax liability account when it was discovered that the tax rate would be higher than originally estimated.
C) to change material credit balances in accounts receivable accounts to accounts payable accounts.
D) to increase the allowance for doubtful accounts when it was discovered that a customer had filed for bankruptcy.

Question

Quizplus · Accepted Answer

Reclassification entries are used to move amounts from one account to another to correct classification errors. Changing credit balances from accounts receivable to accounts payable is a reclassification.

An Example of a Reclassification Entry Would Be an Entry