A company uses the allowance method to account for uncollectible accounts receivable. When the firm writes off a specific customer's account receivable
A) total current assets are reduced
B) total expenses for the period are increased
C) net realizable value of accounts receivable increases
D) there is no effect on total current assets or total expenses

Question

Quizplus · Accepted Answer

When a company writes off a specific customer's account receivable under the allowance method, it does not affect total current assets or total expenses because the expense was already recognized when the allowance for doubtful accounts was established. The write-off merely adjusts the accounts receivable and allowance for doubtful accounts balances without impacting the income statement or the total current assets.

A Company Uses the Allowance Method to Account for Uncollectible