The net effect of the entries to recognize the collection of a previously written-off account under the allowance method will
A) decrease total assets.
B) have no effect on total assets or total equity.
C) increase total equity.
D) decrease total equity.

Question

Quizplus · Accepted Answer

When a previously written-off account is collected, the allowance for doubtful accounts is decreased, and accounts receivable is increased, which offsets each other, resulting in no effect on total assets or total equity.

The Net Effect of the Entries to Recognize the Collection