The Entry to Write Off an Account Under the Allowance

question 65

Multiple Choice

The entry to write off an account under the allowance method for estimating uncollectible accounts:

• A) reduces total assets.
• B) reduces net income.
• C) has no effect on total assets or net income.
• D) increases net income.

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Definitions:

Useful Life

The estimated period an asset is expected to be used before it is deemed no longer useful for operations.

Units-Of-Activity

A depreciation method that allocates cost based on the actual usage, work performed, or units produced by an asset.

Asset’s Use

The utilization of an asset in a way that enhances its value or contributes to earning revenue.

Manufacturing Company

A company that uses raw materials, labor, and equipment to produce finished goods on a large scale.