A company uses the direct write-off method to account for bad debts. What are the effects on the accounting equation of the entry to record the write-off of a customer's account balance? a. Assets increase and Stockholders' equity decrease b. Assets and Stockholders' equity decrease c. Stockholders' equity and liabilities decrease d. Assets and liabilities decrease

A company uses the direct write-off method to account for bad debts. What are the effects on the accounting equation of the entry to record the write-off of a customer's account balance? a. Assets increase and Stockholders' equity decrease b. Assets and Stockholders' equity decrease c. Stockholders' equity and liabilities decrease d. Assets and liabilities decrease

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 26MC: What is the impact on the accounting equation when an accounts receivable is collected? A. both...

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What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customers
Each time an account is written off under the direct write-off method, Bad Debt Expense is debited.
Under the allowance method of uncollectible accounts, the entry to write off a customer’s account affects the accounting equation by: decreasing an asset and decreasing stockholders’ equity (expense) increasing an asset and decreasing an asset increasing a liability and decreasing a liability decreasing a liability and increasing stockholders’ equity (revenue)
A company accounts for possible bad debts using the allowance method. When an actual bad debt occurs, what effect does it have on the accounting equation? O Decreases asscts and decreases stockholders' equity. O Increases assets and increases stockholders' equity. O Decreases assets and decreases liabilities. O No effect on the accounting equation.
When a company borrows money from the bank, what is the impact on the accounting equation? Group of answer choices Assets decrease and labilities increase Assets increase and liabilities increase Assets decrease and liabilities decrease Assets increase and liabilities decrease
What is the impact on the accounting equation when a payment of accountable payable is made? what is the impact on accounting equation when an account receivable is collected? what is the impact on the accounting equation when a sell occurs? what is the impact on the accounting equation when stock is issued, in exchange for assets? which of the following accounts is increased by a debit? which of the following camp do not increase with a debit entry? which of the following pairs increase with credit entries? which of the following pairs of accounts are impacted the same with debits and credits? which of the following count normally have a debit balance? what type of account is prepaid insurance?
A company uses the direct write-off method to account for bad debts. What is the impact on the accounting equation of the entry to record the write-off of a customer’s account balance? Assets and liabilities decrease. Assets and shareholders’ equity decrease. Assets increase and shareholders’ equity decreases. Shareholders’ equity and liabilities decrease.
Could anyone explain this question? indicate the financial statement on which the account’s balance should be found. Also, if the account is shown on a company’s balance sheet, indicate if it should appear in the asset section, liability section, retained earnings section, income section, or stockholders’ equity section. Accounts Receivable Note Receivable Discount on Note Receivable Bank Service Charge Expense Bad Debts Expense Sales Return Liability Interest Revenue Allowance for Doubtful Accounts Cash Over/ Short Interest Receivable Sales Returns and Allowances
It is the amount collected by the business in advance from the customers before the business actually provide the goods or services to the customers. a. Bank overdrafts b. Outstanding expenses c. Accounts payable d. Unearned revenues
27.A company writes off as uncollectible an account receivable from a bankrupt customer. The company has an adequate amount in its Allowance for Uncollectible Accounts. What would be the effect of this transaction in the company's financial statements? a. Operating expenses for the period will increase. b. Total current assets will decrease. c. Net profit for the period will not be affected. d. Net profit for the period will decrease.
When an account receivable is “recovered”a. Total assets increase.b. Total assets decrease.c. Stockholders’ equity increases.d. None of the above
Which of the following will affect net income? O O Writing off an Account Receivable. Estimating bad debts at the end of the year Re-establishing and collection of an account that was previously written off. O All of the above transactions will affect net income.