Under the allowance method of accounting for uncollectible accounts,
A) the cash realizable value of accounts receivable is greater before an account is written off than after it is written off.
B) Bad Debts Expense is debited when a specific account is written off as uncollectible.
C) the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.
D) Allowance for Doubtful Accounts is closed each year to Income Summary.

Question

Quizplus · Accepted Answer

Under the allowance method, the cash realizable value of accounts receivable remains the same before and after an account is written off because the write-off is offset by a reduction in the Allowance for Doubtful Accounts.

Under the Allowance Method of Accounting for Uncollectible Accounts