When an Account Is Written Off Using the Allowance Method

question 113

Multiple Choice

When an account is written off using the allowance method for uncollectible accounts, accounts receivable

• A)is unchanged and the allowance account increases.
• B)increases and the allowance account increases.
• C)decreases and the allowance account decreases.
• D)decreases and the allowance account increases.

---

Definitions:

Annual Rate of Return

The percentage of profit or loss made from an investment in a year, taking into account both capital gains and interest or dividends received.

Operating Expenses

Expenses incurred in the process of earning sales revenue.

Incremental Effect

The impact of a particular decision on a company's finances, considering only the changes that directly result from the decision.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.