Asked by Dalvin Mitchell on Jul 09, 2024
Verified
Under the allowance method writing off an uncollectible account
A) affects only balance sheet accounts.
B) affects both balance sheet and income statement accounts.
C) affects only income statement accounts.
D) is not acceptable practice.
Allowance Method
An accounting technique used to estimate bad debts and adjust accounts receivable to reflect only receivables expected to be collected.
Uncollectible Account
A receivable that a company has deemed unlikely ever to be collected and is therefore written off as a bad debt expense.
- Comprehend and implement the principle of dishonoring a note.
- Understand the operation and finalization procedure of the Allowance for Doubtful Accounts.
Verified Answer
SL
Stephanie LuceroJul 15, 2024
Final Answer :
A
Explanation :
Writing off an uncollectible account under the allowance method affects only balance sheet accounts. It reduces the accounts receivable and the allowance for doubtful accounts without impacting the income statement, as the expense was already recognized when the allowance was initially estimated.
Learning Objectives
- Comprehend and implement the principle of dishonoring a note.
- Understand the operation and finalization procedure of the Allowance for Doubtful Accounts.
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