An increase in the Allowance for Doubtful Debts will:
A) reduce the cash account.
B) reduce total assets.
C) increase total liabilities.
D) increase shareholders' equity.

Question

Quizplus · Accepted Answer

Increasing the Allowance for Doubtful Debts is a way of increasing the provision for bad debts, which reduces the value of accounts receivable and ultimately reduces total assets.

An Increase in the Allowance for Doubtful Debts Will