Question

When an account is written off using the allowance method, the net accounts receivable will:_______

a. stay the same.
b. net accounts receivable will decrease.
c. cash realizable value of total accounts receivable will increase.
d. allowance account will increase.

Answer 1

The correct answer is a. stay the same.

Step-by-step explanation:

The method of assigning accounts receivable is performed in order to stop recognizing the accounts that are considered uncollectible, that is, in which all possible resources have been exhausted and therefore no action is expected from the customer. When this method is applied, what is done is to decrease the total value of the obligation, but without affecting the total value of the net accounts receivable.