How does the year-end adjusting entry to recognize uncollectible accounts expense affect the elements of the financial statements?
A)Decrease total assets and decrease stockholders' equity.
B)Increase total assets and decrease stockholders' equity.
C)Increase total liabilities and increase stockholders' equity.
D)Decrease total liabilities and increase stockholders' equity.

Question

Quizplus · Accepted Answer

The adjusting entry will decrease assets (by increasing the allowance for doubtful accounts,a contra asset account)and stockholders' equity.It will increase expenses (uncollectible accounts expense),which decreases net income.

How Does the Year-End Adjusting Entry to Recognize Uncollectible Accounts