when an account is written off using the allowance mehtod , accounts receivable  A) is unchanged and the allowance for impairment increases. B) increases and the allowance for impairment inceases. C) decreases and hte allowance for impairment increase D)decreases and hte allowance for impairment decrease

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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when an account is written off using the allowance mehtod , accounts receivable 

A) is unchanged and the allowance for impairment increases.

B) increases and the allowance for impairment inceases.

C) decreases and hte allowance for impairment increase

D)decreases and hte allowance for impairment decrease 

Expert Solution
Allowance method:

Allowance method: It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of a particular period. Under this method, bad debt expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with the matching principle by using the allowance for bad debt account.

Allowance for uncollectible accounts is a contra-asset account, which is related to accounts receivable. Allowance for uncollectible accounts are generally created to record the estimated bad debt expense raise from the credit sales.

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