On December 1, 2013, Anson's Drug Store Concluded That a Customer's

question 92

Multiple Choice

On December 1, 2013, Anson's Drug Store concluded that a customer's $325 account receivable was uncollected and that the account should be written off. What effect will this write-off have on the company's 2013 net income and balance sheet totals assuming the direct write-off method is used to account for bad debts?

• A)decrease in net income; decrease in total assets
• B)increase in net income; no effect on total assets
• C)no effect on net income; decrease in total assets
• D)no effect on net income; no effect on total assets

---

Definitions:

Tax Shifting

The process whereby the economic burden of a tax is passed on from one group to another.

Income Tax

A tax levied by governments on individuals or entities based on their income or profits, varying according to earnings levels.

Corporation Income Tax

A tax imposed on the net income of a corporation, calculated based on the company's profit.

Capital Flow

The movement of money for the purpose of investment, trade, or business production, either within a country or internationally.