The adjustment to account for future bad debts has the effect of (1)reducing assets and (2)increasing liabilities.

Name: The adjustment to account for future bad debts has the effect of (1)reducing assets and (2)increasing liabilities.
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Question

Quizplus · Accepted Answer

The adjustment for future bad debts reduces assets by increasing the allowance for doubtful accounts, but it does not increase liabilities; it affects equity by reducing net income.

The Adjustment to Account for Future Bad Debts Has the Effect