Assuming a company uses the allowance method,the entry to recognize the write-off of the specific uncollectible accounts will
A)increase total assets and total equity.
B)increase total assets and decrease total equity.
C)decrease total assets and total equity.
D)not affect total assets or total equity.

Question

Quizplus · Accepted Answer

When a company writes off a specific uncollectible account under the allowance method, it reduces the accounts receivable and the allowance for doubtful accounts by the same amount. This action does not affect total assets (since both the asset and contra-asset accounts are reduced by the same amount) or total equity, as the expense related to bad debts was previously recognized when the allowance was adjusted.

Assuming a Company Uses the Allowance Method,the Entry to Recognize