The occurrence that most likely would have no effect on 2008 net income (assuming that all amounts involved are material) is the
A) sale in 2008 of an office building contributed by a stockholder in 1983.
B) collection in 2008 of a receivable from a customer whose account was written off in 2007 by a charge to the allowance account.
C) settlement based on litigation in 2008 of previously unrecognized damages from a serious accident which occurred in 2006.
D) worthlessness determined in 2008 of stock purchased on a speculative basis in 2004.

Question

Quizplus · Accepted Answer

The collection in 2008 of a receivable from a customer whose account was written off in 2007 by a charge to the allowance account would have no effect on 2008 net income because the write-off and recovery are accounted for within the allowance for doubtful accounts, not affecting the income statement in the year of recovery.

The Occurrence That Most Likely Would Have No Effect on 2008