Under the allowance method of accounting for bad debts, the actual write-off of an account receivable determined to be uncollectible
A)decreases current assets.
B)has no effect on current assets.
C)increases current assets.
D)occurs in the same accounting period as the sale.

Question

Quizplus · Accepted Answer

Under the allowance method, when an account receivable is deemed uncollectible and written off, it does not affect current assets because the allowance for doubtful accounts (a contra asset account) has already accounted for the potential loss. The write-off decreases both the accounts receivable and the allowance for doubtful accounts by the same amount, leaving total current assets unchanged.

Under the Allowance Method of Accounting for Bad Debts, the Actual