Under the direct write-off method, the entry to record an uncollectible account has the following effect on the financial statements:
A)increases expenses and decreases liabilities.
B)decreases assets and increases owner's equity.
C)decreases net income and decreases assets.
D)increases expenses and increases assets.

Question

Quizplus · Accepted Answer

The direct write-off method involves writing off an uncollectible account directly to expense, which decreases net income (due to the increase in expenses) and decreases assets (specifically, the accounts receivable balance).

Under the Direct Write-Off Method, the Entry to Record an Uncollectible