Assume the Hart Company uses the allowance method.When the company writes off a customer's account balance that has no chance of collection:
A)total assets will decrease.
B)total liabilities will increase.
C)expenses and revenues will both increase.
D)total assets do not change.

Question

Quizplus · Accepted Answer

When the allowance method is used and a customer account is written off,a decrease is recorded in Accounts Receivable,which is offset by a decrease in the contra-account,Allowance for Doubtful Accounts.The decrease in Accounts Receivable decreases total assets,while the decrease in the Allowance for Doubtful Accounts increases total assets.As a result,total assets do not change.A write-off does not affect liabilities,revenues,or expenses.

Assume the Hart Company Uses the Allowance Method