When using the allowance method for accounting for bad debts,accounts receivable is reported on the balance sheet at the expected net realizable value.When a particular receivable from a customer ultimately is determined to be uncollectible and is written off,the recording of this event will:
A)Decrease the net realizable value of the accounts receivable.
B)Have an effect that is not determinable from the information given.
C)Increase the net realizable value of the accounts receivable.
D)Have no effect on the net realizable value of the accounts receivable.

Question

Quizplus · Accepted Answer

When a receivable is written off under the allowance method, it involves reducing the accounts receivable and the allowance for doubtful accounts by the amount of the receivable written off. This action does not change the net realizable value of accounts receivable because the allowance for doubtful accounts had already accounted for the potential loss.

When Using the Allowance Method for Accounting for Bad Debts,accounts