The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
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

When an account previously written off is collected under the allowance method, it requires reinstating the account and then recording the cash collection. This process reverses the write-off and records the cash receipt without affecting the current period's income, as the bad debt expense was recognized in the period the account was initially written off.

The Collection of an Account That Had Been Previously Written