Final answer:
If Pixie Inc. is using the allowance method and writes off a specific accounts receivable, the write off will decrease net income.
Step-by-step explanation:
Accounts receivable (AR) are the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable are listed on the balance sheet as a current asset. Any amount of money owed by customers for purchases made on credit is AR. If Pixie Inc. is using the allowance method and writes off a specific accounts receivable, the write off will decrease net income. The allowance method involves estimating and recording uncollectible accounts as an expense.
When a specific accounts receivable is deemed uncollectible and is written off, it reduces the amount of accounts receivable and the allowance for doubtful accounts. This, in turn, decreases the net income, as it is an expense that is subtracted from revenues. For example, if Pixie Inc. had recorded $10,000 as an allowance for doubtful accounts, and then writes off a specific $500 accounts receivable, the allowance for doubtful accounts would decrease to $9,500 and the net income would be reduced by $500.