When an account is written off using the allowance method, the
A) cash realizable value of total accounts receivable will increase.
B) total accounts receivable will decrease.
C) allowance account will increase.
D) total accounts receivable will stay the same.

Question

Quizplus · Accepted Answer

When an account is written off using the allowance method, the total accounts receivable will decrease as the specific account is removed from the accounts receivable balance. The allowance for doubtful accounts account will also decrease as it has been previously adjusted for the estimated amount of uncollectible accounts. The cash realizable value of total accounts receivable will not be affected by the write-off.

When an Account Is Written Off Using the Allowance Method