Question

Sales made on account are recorded with a debit to Accounts Receivable and credit to Sales Revenue for the price times the quantity. Management knows that some of those accounts will not be collected but is unsure which specific customers it will be. Thus, management estimates the amount and records an adjusting entry. Later, when the specific non-paying customer is identified, it writes off the account. The effect of the write off on the accounting equation is to _____. Multiple choice question. increase one asset and decrease another increase assets and stockholders' equity increase liabilities and decrease stockholders' equity reduce assets and stockholders' equity

Answer 1

The correct answer is option A. The effect of the write-off in the accounting equation is to increase one asset and decrease another.

What is a write off in accounting?

This is a term that is used to refer to the removal of all accounts that are uncollectible for the general ledger of the business.

It is a write off when a person is not able to carry out all of the obligations that they are supposed to do.

Read more on a write off here:

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