Question

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles: a) will increase income in the period it is collected. b) will decrease income in the period it is collected. c) requires a correcting entry for the period in which the account was written off. d) does not affect income in the period it is collected.

Answer 1

Answer:

The correct option is D

Explanation:

Under the method of allowance, the uncollectible accounts receivable will be recorded in the same accounting period as the sale of an estimate of the bad debt expense. So, the collection of the account which was earlier written off, will not have any affect on the income in the period or year it is received or collected.