Final answer:
When adjusting for future write-offs, the Allowance for Doubtful Accounts and the Bad Debt Expense are the two accounts that get affected, influencing both the balance sheet and income statement to reflect more accurate financial estimates.
Step-by-step explanation:
When adjusting for future write-offs, typically in the context of accounting for bad debts, the two accounts that are affected are the Allowance for Doubtful Accounts and the Bad Debt Expense. An adjustment is made to record an estimate of the expected future write-offs. The Allowance for Doubtful Accounts is a contra-asset account that appears on the balance sheet and reduces the amount of gross accounts receivable to reflect the amount that is expected to be collected. The Bad Debt Expense is an expense account that appears on the income statement and represents the cost of the estimated future write-offs during a specific period.
The process of making this adjustment is part of accrual accounting, and involves a prediction of future events impacting the company's financial statements. Essentially, this adjustment entry will increase the bad debt expense on the income statement and increase the allowance for doubtful accounts on the balance sheet. The net effect is that assets are not overstated and expenses reflect more accurate predictions based on the company's experience with past receivables.