S Ltd has the following balance sheet information on 28 February 2019: On 28 February 2019, the company receives notification from R Ltd that it has filed for bankruptcy. The controller of S Ltd decides to write off R Ltd's account for $10 600. Which of the following statements is TRUE?
A) Net income and net accounts receivable will decrease.
B) Net income will decrease but no change will occur in net accounts receivable.
C) No change will occur in net income but net accounts receivable will decrease.
D) Neither net income nor net accounts receivable will decrease.

Question

S Ltd has the following balance sheet information on 28 February 2019:  On 28 February 2019, the company receives notification from R Ltd that it has filed for bankruptcy. The controller of S Ltd decides to write off R Ltd's account for $10 600. Which of the following statements is TRUE?
A) Net income and net accounts receivable will decrease. 
B) Net income will decrease but no change will occur in net accounts receivable. 
C) No change will occur in net income but net accounts receivable will decrease. 
D) Neither net income nor net accounts receivable will decrease.

Quizplus · Accepted Answer

The Answer of S Ltd has the following balance sheet information on 28 February 2019:  On 28 February 2019, the company receives notification from R Ltd that it has filed for bankruptcy. The controller of S Ltd decides to write off R Ltd's account for $10 600. Which of the following statements is TRUE?
A) Net income and net accounts receivable will decrease. 
B) Net income will decrease but no change will occur in net accounts receivable. 
C) No change will occur in net income but net accounts receivable will decrease. 
D) Neither net income nor net accounts receivable will decrease.

S Ltd Has the Following Balance Sheet Information on 28