Under the allowance method, the entry to write off an account that has been deemed uncollectible has an impact on the net income of the firm.

Question

Quizplus · Accepted Answer

The allowance method involves recording an estimate of bad debt expense in the period when the sales occur, not when specific accounts are written off. Writing off an account under this method affects only the allowance for doubtful accounts and the accounts receivable, not net income.

Under the Allowance Method, the Entry to Write Off an Account