Under the allowance method for uncollectible accounts,
A) bad debts expense is not recorded until a customer defaults.
B) the entry to write off an uncollectible account only involves statement of financial position accounts.
C) allowance for doubtful accounts increases, while accounts receivables decrease when writing off an uncollectible account.
D) bad debt expense increases, while allowance for doubtful accounts decreases when writing off an uncollectible account.

Question

Quizplus · Accepted Answer

Under the allowance method, when an account is written off, the entry involves debiting the Allowance for Doubtful Accounts and crediting Accounts Receivable, both of which are statement of financial position accounts.

Under the Allowance Method for Uncollectible Accounts