Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 42 - No. 3)
If a company's estimated uncollectible accounts increase, what is the immediate effect on the financial statements?
An increase in assets and a decrease in liabilities.
A decrease in assets and an increase in liabilities.
An increase in bad debt expense and a decrease in net income.
An increase in accounts receivable and a decrease in expenses.
Explanation
This results in higher expenses and lower net income.
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