When an adjusting entry is made in anticipation of some receivables being uncollectible the adjustment reduces:
A)both net income and net accounts receivable.
B)net income and increases liabilities.
C)net accounts receivable and increases liabilities.
D)net income and selling expenses.

Question

Quizplus · Accepted Answer

Adjusting entries for uncollectible receivables, often through an allowance for doubtful accounts, reduce both net income (due to increased expense for bad debt) and net accounts receivable (since the allowance account is a contra asset that reduces the total accounts receivable reported on the balance sheet).

When an Adjusting Entry Is Made in Anticipation of Some