When a company that uses the allowance method writes off an actual bad debt:
A)total assets decrease.
B)total liabilities increase.
C)total expenses increase and total revenues increase.
D)total assets,revenue,and expenses remain the same.

Question

Quizplus · Accepted Answer

When a company writes off an actual bad debt under the allowance method, it decreases the accounts receivable and the allowance for doubtful accounts by the same amount. This action does not affect total assets, revenues, or expenses, as the expense was already recognized when the allowance was initially estimated.

When a Company That Uses the Allowance Method Writes Off