A company's year-end adjusting entry to recognize uncollectible accounts expense will
A) increase assets and increase equity.
B) increase liabilities and decrease equity.
C) decrease assets and decrease equity.
D) decrease liabilities and increase equity.

Question

Quizplus · Accepted Answer

The adjusting entry to recognize uncollectible accounts expense will involve a decrease in the asset account Accounts Receivable, and an increase in the expense account Bad Debts Expense. This transaction will cause a decrease in assets and a decrease in equity. Thus, option C is correct. Options A, B, and D are incorrect.

A Company's Year-End Adjusting Entry to Recognize Uncollectible Accounts Expense