Question

O'Brien Brewery and Delgado Vintage Wines both decided to write off a specific customer's uncollectible debt.

a) Net income increases
b) Total assets decrease
c) Equity increases
d) Accounts receivable increase

Answer 1

For O'Brien Brewery and Delgado Vintage Wines, writing off a customer's uncollectible debt decreases total assets and accounts receivable but does not change net income or equity. In the financial market, an increase in the quantity of loans occurs when there is a rise in demand for loans or a rise in supply.

Step-by-step explanation:

When O'Brien Brewery and Delgado Vintage Wines decide to write off a specific customer's uncollectible debt, the effect on the financial statements is as follows:

As for the options provided regarding financial market changes, an increase in the quantity of loans made and received can occur with either:

A fall in demand or a fall in supply would generally have the opposite effect and lead to a decrease in the quantity of loans made and received.