Final answer:
The statement is false because the recovery of a bad debt previously written off under the allowance method affects both the statement of financial position and the statement of financial performance, as it includes recording the recovered amounts in cash or cash equivalents and adjusting the allowance for doubtful accounts.
Step-by-step explanation:
The statement "Under the allowance method, the recovery of a bad debt only affects the statement of financial position accounts" is false. The allowance method for accounting for bad debts involves creating an allowance for doubtful accounts, which is an estimate of the amount of receivables that may not be collected in the future. This allowance is shown as a contra-asset account on the statement of financial position, reducing the net amount of accounts receivable.
When a bad debt is actually written off, the allowance account is decreased, and the accounts receivable are reduced accordingly. However, if a previously written-off bad debt is recovered, the entry to record the recovery will increase both the accounts receivable and the allowance for doubtful accounts. Importantly, the recovery also involves the statement of financial performance, as it requires the recording of the cash or cash equivalent received, which affects the cash flow statement.