The occurrence which most likely would have no effect on 2011 net income (assuming that all amounts involved are material) is the
A)sale in 2011 of an office building contributed by a stockholder in 1987.
B)collection in 2011 of a receivable from a customer whose account was written off in 2010 by a charge to the allowance account.
C)settlement based on litigation in 2011 of previously unrecognized damages from a serious accident which occurred in 2008.
D)worthlessness determined in 2011 of stock purchased on a speculative basis in 2007.

Question

Quizplus · Accepted Answer

The collection of a receivable that was previously written off does not affect net income, as it is recorded as a recovery of bad debts, which is a balance sheet transaction.

The Occurrence Which Most Likely Would Have No Effect on 2011