Cleybourne Company wrote off an $800 uncollectible account receivable against the allowance for doubtful accounts with a balance of $2,100. The current ratio after the write-off of the uncollectible account
A) would be less than before the write-off of the account.
B) would be greater than before the write-off of the account.
C) would be the same as before the write-off of the account.
D) cannot be determined with the information given.

Question

Quizplus · Accepted Answer

The write-off of an uncollectible account affects both accounts receivable and the allowance for doubtful accounts, which are both asset accounts. Since both are reduced by the same amount, total assets remain unchanged, and thus the current ratio remains the same.

Cleybourne Company Wrote Off an $800 Uncollectible Account Receivable Against