When an account is written off using the allowance method for uncollectible accounts, the
A)carrying amount of total accounts receivable increases.
B)net accounts receivable decreases.
C)allowance account increases.
D)net accounts receivable stay the same.

Question

Quizplus · Accepted Answer

When an account is written off using the allowance method, the allowance for doubtful accounts (a contra asset account) is reduced, and accounts receivable is also reduced by the same amount. This action does not affect the net accounts receivable (accounts receivable minus allowance for doubtful accounts) because both the accounts receivable and the allowance for doubtful accounts are reduced by the same amount.

When an Account Is Written Off Using the Allowance Method