Summers, Inc. uses the allowance method to account for bad debts. The entry to record the write-off of a customer's account balance decreases
A)assets and owners' equity.
B)assets and decreases liabilities.
C)owners' equity and revenues.
D)the accounts receivable account.

Question

Quizplus · Accepted Answer

When using the allowance method for bad debts, the write-off of a customer's account balance only affects the accounts receivable account, reducing the amount of outstanding receivables and increasing the balance of the allowance for doubtful accounts. It does not impact assets or liabilities directly and does not affect the income statement or owners' equity.