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 Debt 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

The allowance method involves estimating uncollectible accounts at the end of each period, which affects the balance of the Allowance for Doubtful Accounts. When an account is actually written off, it does not affect the cash realizable value of accounts receivable because the estimated uncollectible amount has already been accounted for. This keeps the cash realizable value the same before and after the write-off.

Under the Allowance Method of Accounting for Uncollectible Accounts