The collection of an account that had been previously written off under the allowance method for uncollectible accounts
A)will increase profit in the period it is collected.
B)will decrease profit in the period it is collected.
C)requires a correcting entry for the period in which the account was written off.
D)does not affect profit in the period it is collected.

Question

Quizplus · Accepted Answer

The collection of an account that had been previously written off under the allowance method for uncollectible accounts does not affect profit in the period it is collected. This is because the write-off had already been accounted for as an expense in the period the account became uncollectible. Therefore, the subsequent collection of the account only results in a decrease in the allowance for uncollectible accounts and an increase in cash or accounts receivable, but it does not affect the current period's profit.

The Collection of an Account That Had Been Previously Written