In a charitable action, one firm is relieved of an obligation to a second firm. As a result, the debtor firm debits:

Name: In a charitable action, one firm is relieved of an obligation to a second firm. As a result, the debtor firm debits:
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When a firm is relieved of an obligation to another firm through a charitable action, it is considered a forgiveness of debt. Therefore, the debtor firm would debit a liability account to reduce the amount of debt owed.

In a Charitable Action, One Firm Is Relieved of an Obligation