A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable,
A) total current assets are reduced
B) total expenses for the period are increased
C) the net realizable value of accounts receivable increases
D) there is no effect on total current assets or total expenses

Question

Quizplus · Accepted Answer

When a specific customer's account receivable is written off under the allowance method, the write-off is made against the allowance for doubtful accounts, which has already been estimated and recorded as an expense. Therefore, there is no immediate effect on total current assets or total expenses at the time of the write-off.

A Company Uses the Allowance Method to Account for Uncollectible