Proper accounting requires that an account receivable must be written off by the client when:
A) the customer files for bankruptcy.
B) the client company concludes that an amount is no longer collectible.
C) the account is at least six months old.
D) a collection agency cannot inspire the customer to pay the debt.

Question

Quizplus · Accepted Answer

An account receivable should be written off by the client company when it determines that an amount is no longer collectible. This is because the account has become a bad debt and keeping it as an asset can provide a misleading picture of the financial health of the company. The other options may also lead to the need to write off the account, but they are not the primary reasons for doing so.

Proper Accounting Requires That an Account Receivable Must Be Written