Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts
A)total assets decrease.
B)total assets are unchanged.
C)net income is unchanged.
D)liabilities decrease.

Question

Quizplus · Accepted Answer

When a year-end adjustment is made for estimated uncollectible accounts, bad debt expense is recorded, which decreases net income and reduces total assets by increasing the allowance for doubtful accounts (a contra-asset account).

Under the Allowance Method, When a Year-End Adjustment Is Made