What is the effect of recognizing $7,500 of uncollectible accounts expense under the direct write-off method?

Question

Quizplus · Accepted Answer

Under the direct write-off method, uncollectible accounts expenses are recognized when specific accounts are deemed uncollectible and written off as bad debts. This results in a decrease in the amount of accounts receivable (an asset), which leads to a decrease in both total assets and stockholders' equity (since stockholders' equity is calculated as assets minus liabilities). Therefore, the correct answer is C.

What Is the Effect of Recognizing $7,500 of Uncollectible Accounts