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)Neither net income nor net assets are affected.
D)Both net assets and net income are increased.

Question

Quizplus · Accepted Answer

When a receivable that had been previously written off is collected under the allowance method, the collection is recorded by reversing the write-off and then recording the cash collection. This process restores the receivable and the allowance amounts without affecting net income or net assets, as the bad debt expense was recognized in the period the receivable was deemed uncollectible, not when it was actually written off or subsequently collected.

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