When an Account Is Written Off Using the Allowance Method

question 51

Multiple Choice

When an account is written off using the allowance method 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.

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Definitions:

Obligor

The party in a contractual agreement who is bound to provide a benefit or payment to another.

Assignment

A contracting party’s transfer of his or her rights to a contract to a third party.

Personal in Nature

Refers to anything related to or affecting a person individually, rather than businesses or entities.

Condition Precedent

A condition in a contract that must be met before a party's promise becomes enforceable.