On October 12 of the Current Year,a Company Determined That

question 4

Multiple Choice

On October 12 of the current year,a company determined that a customer's account receivable was uncollectible and that the account should be written off.Assuming the allowance method is used to account for bad debts,what effect will this write-off have on the company's net income and total assets?

• A)Decrease in net income; no effect on total assets.
• B)No effect on net income; no effect on total assets.
• C)Decrease in net income; decrease in total assets.
• D)Increase in net income; no effect on total assets.
• E)No effect on net income; decrease in total assets.

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Definitions:

Common Stock Dividends Distributable

An amount that has been declared by a corporation to be distributed to its common stockholders as dividends but has not yet been paid.

Paid-in Capital

The amount of money raised by a company through the issuance of securities to investors, reflecting the capital provided by shareholders in exchange for stock.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.

Paid-in Capital

The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares and amounts over par value.