Under the allowance method,when a receivable that had been previously written off is collected:
A)Net income is increased.
B)Net assets are increased.
C)Net income and net assets are not affected.
D)Net assets and net income are both increased.

Question

Quizplus · Accepted Answer

When a previously written-off receivable is collected, it does not affect net income or net assets because the write-off and subsequent collection are both adjustments to the allowance for doubtful accounts, which is a balance sheet account. The income statement is not impacted by these transactions.

Under the Allowance Method,when a Receivable That Had Been Previously