Under the allowance method for uncollectible accounts, when a year-end adjustment is made for estimated uncollectible accounts,
A)total assets decrease.
B)total assets are unchanged.
C)net income is unchanged.
D)liabilities decrease.

Question

Quizplus · Accepted Answer

The allowance method involves estimating uncollectible accounts at the end of each period, which increases the allowance for doubtful accounts (a contra asset account) and decreases net income through an expense. This adjustment reduces total assets because it increases the contra asset account that reduces accounts receivable's net value.

Under the Allowance Method for Uncollectible Accounts, When a Year-End