When an uncollectible account receivable is written off against the allowance for bad debts:
A) total current assets decrease and expenses increase.
B) total current assets are not affected.
C) total current assets decrease and expenses decrease.
D)current assets decrease and expenses are not affected.

Question

Quizplus · Accepted Answer

When an uncollectible account receivable is written off against the allowance for bad debts, it means that the company has previously set aside an allowance for such bad debts. Therefore, the actual write-off does not affect total current assets, as the reduction in accounts receivable is offset by the allowance for bad debts. Additionally, since the allowance for bad debts is a contra asset account, its reduction due to the write-off will also not affect expenses.

When an Uncollectible Account Receivable Is Written Off Against the Allowance