The entry to write off an Account Receivable under the allowance method:
A)reduces total assets and increases net income.
B)reduces net income and total assets.
C)has no effect on total assets and net income.
D)increases net income and total assets.

Question

Quizplus · Accepted Answer

Writing off an Account Receivable under the allowance method involves reducing both the Accounts Receivable and the Allowance for Doubtful Accounts. This action does not affect total assets (since both the asset and contra asset are reduced by the same amount) or net income (since the expense was recognized earlier when the allowance was created, not at the write-off).

The Entry to Write Off an Account Receivable Under the Allowance