Under the allowance method,when a year-end adjustment is made for estimated uncollectible accounts,
A)total assets decrease.
B)liabilities increase.
C)total assets are unchanged.
D)net income is unchanged.

Question

Quizplus · Accepted Answer

Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts, it increases the allowance for doubtful accounts (a contra asset account) and decreases net income due to the bad debt expense. This results in a decrease in total assets, as the net accounts receivable balance is reduced.

Under the Allowance Method,when a Year-End Adjustment Is Made for Estimated