When an account is written off using the allowance method for uncollectible accounts, trade accounts receivable
A) is unchanged and the allowance account increases.
B) increases and the allowance account increases.
C) decreases and the allowance account decreases.
D) decreases and the allowance account increases.

Question

Quizplus · Accepted Answer

When an account is written off using the allowance method, the trade accounts receivable decreases because the specific receivable is being removed from the books. Simultaneously, the allowance for doubtful accounts also decreases because this account had previously been set up to anticipate such losses, thus no impact on the overall financial position at the time of the write-off.

When an Account Is Written Off Using the Allowance Method