The collection of an account that had been previously written off under the allowance method of accounting for uncollectible accounts
A)will increase income in the period it is collected.
B)will decrease income 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 income in the period it is collected.

Question

Quizplus · Accepted Answer

Under the allowance method, when an account previously written off is collected, it is first reinstated and then recorded as a cash collection. This process does not affect income because the write-off and collection are both balance sheet transactions.

The Collection of an Account That Had Been Previously Written