Ohio Company uses the Allowance for Doubtful Accounts Method. When Ohio writes off an uncollectible account, there is:
A) an increase in Accounts Receivable.
B) a decrease in Accounts Receivable.
C) an increase in the Allowance Account.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

Writing off an uncollectible account using the Allowance for Doubtful Accounts Method decreases Accounts Receivable and decreases the Allowance for Doubtful Accounts, but the net effect on total assets is zero since the allowance account had already accounted for the potential loss.

Ohio Company Uses the Allowance for Doubtful Accounts Method