Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts
A) liabilities decrease
B) net income is unchanged
C) total assets are unchanged
D) total assets decrease

Question

Quizplus · Accepted Answer

When a year-end adjustment is made for estimated uncollectible accounts, the allowance for doubtful accounts (contra asset) is increased, which in turn reduces the accounts receivable (asset) balance. As a result, the total assets decrease.

Under the Allowance Method, When a Year-End Adjustment Is Made