Asked by Lesley Figueroa on Jul 11, 2024
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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)
Direct Write-Off Method
A method of accounting for bad debts that charges the amount of an outstanding account directly to the expense account at the time it is deemed uncollectable.
Accounting Equation
A fundamental principle of accounting that equates assets with the sum of liabilities and shareholders' equity (Assets = Liabilities + Equity).
- Acquiring knowledge on how to apply the direct write-off method to uncollectible accounts and its consequent effect on the accounting equation.
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Learning Objectives
- Acquiring knowledge on how to apply the direct write-off method to uncollectible accounts and its consequent effect on the accounting equation.
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