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

Question

Quizplus · Accepted Answer

When an account previously written off is collected under the allowance method, it does not affect net income. The collection involves reversing the write-off and recognizing the cash received, but these actions do not impact the income statement since the expense was recognized when the allowance was initially estimated.

The Collection of an Account That Had Been Previously Written