The writing off of a debtor's account as a bad debt when no allowance for doubtful debts has been made will see:
A)a decrease in the asset accounts receivable, decrease in equity.
B)no effect.
C)a decrease in the asset accounts receivable, increase in the liability provision for doubtful debts.
D)a decrease in the asset bank, decrease in the asset accounts receivable.

Question

Quizplus · Accepted Answer

Writing off a debtor's account as a bad debt will result in a decrease in the asset accounts receivable, as the debt is no longer expected to be collected. As no allowance for doubtful debts has been made, there will be no corresponding decrease in the liability provision. The decrease in the asset accounts receivable will result in a decrease in equity, as the company's assets have decreased.

The Writing Off of a Debtor's Account as a Bad