Richard LLC Accounts for Possible Bad Debts Using the Allowance

question 3

Multiple Choice

Richard LLC accounts for possible bad debts using the allowance method.When an actual bad debt occurs,what effect does it have on the accounting equation?

• A)Increases assets and increases stockholders' equity.
• B)Decreases assets and decreases stockholders' equity.
• C)Decreases assets and decreases liabilities.
• D)No effect on the accounting equation.

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