Hoff Company Uses the Allowance Method

question 49

Multiple Choice

Hoff Company uses the allowance method.An account that had been previously written-off as uncollectible was recovered.How do the two parts of the recovery (reinstate receivable and collect the receivable) affect the elements of the financial statements when the two parts are considered together?

• A)Increase total assets and stockholders' equity
• B)Increase total assets and decrease total liabilities
• C)Decrease total liabilities and increase stockholders' equity
• D)Has no effect on total assets,total liabilities or stockholders' equity