When a year-end adjustment is made for estimated bad debts:
A) net income is increased.
B) liabilities increase.
C) net assets increase.
D) net assets decrease.

Question

Quizplus · Accepted Answer

When a year-end adjustment is made for estimated bad debts, it results in an increase in the bad debt expense, which decreases net income and, consequently, decreases net assets. This adjustment does not directly affect liabilities or increase net assets or net income.

When a Year-End Adjustment Is Made for Estimated Bad Debts