Under the allowance method of uncollectible accounts, the entry to reinstate a customer's account that had been written off affects the accounting equation by
A) increasing an asset and decreasing an asset
B) increasing a liability and decreasing a liability
C) decreasing an asset and decreasing stockholders' equity (expense)
D) decreasing a liability and increasing stockholders' equity (revenue)

Question

Quizplus · Accepted Answer

Reinstating a customer's account that had been previously written off involves increasing accounts receivable (an asset) and decreasing the allowance for doubtful accounts (also an asset). This action restores the customer's account without impacting liabilities or stockholders' equity.

Under the Allowance Method of Uncollectible Accounts, the Entry to Reinstate