The net effect of the entries to recognize the receipt of a previously written-off account under the allowance method is to:
A)have no effect on total assets or total equity.
B)increase total equity only.
C)decrease total assets.
D)increase total assets and total equity.

Question

Quizplus · Accepted Answer

When a previously written-off account is recovered under the allowance method, the entry to reinstate the account receivable and the entry to record the cash receipt offset each other, resulting in no net effect on total assets or total equity.

The Net Effect of the Entries to Recognize the Receipt