Under the direct write-off method of uncollectible accounts, if a written off account is later collected, the effect on the accounting equation is
A) an increase in assets and an increase in liabilities
B) an increase in liabilities and a decrease in stockholders' equity (expense)
C) a decrease in assets and an increase in stockholders' equity (expense)
D) a decrease in assets and a decrease in stockholders' equity (expense)

Question

Quizplus · Accepted Answer

Under the direct write-off method, the written-off account has already been recognized as an expense and a decrease in assets. Therefore, when the account is later collected, it is treated as an increase in assets and an increase in stockholders' equity (expense). There is no effect on liabilities.

Under the Direct Write-Off Method of Uncollectible Accounts, If a Written