Thomas Company receives information that requires the company to increase its expectations of uncollectible accounts receivable.
Which of the following does not occur on the company's financial statements?

Question

Quizplus · Accepted Answer

B) Accounts receivables (gross) is not directly reduced when a company increases its expectations of uncollectible accounts receivable. Instead, the company increases its bad debt expense and the allowance for doubtful accounts, which reduces net income and the net carrying value of accounts receivable, but the gross amount of accounts receivable remains unchanged.

Thomas Company Receives Information That Requires the Company to Increase