Final answer:
Recording a credit memo for a bad debt causes the Accounts Receivable account to decrease.
Step-by-step explanation:
Recording a credit memo for a bad debt causes the Accounts Receivable account to decrease.
In accounting, a bad debt is an amount that is unlikely to be collected from a customer. When a company records a credit memo to account for a bad debt, it reduces the amount owed by the customer. This reduction is reflected as a decrease in the Accounts Receivable account on the balance sheet.
For example, if a company has a $500 bad debt from a customer, they would record a credit memo decreasing the customer's accounts receivable balance by $500.