Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 46 - No. 43)
What is the impact on the financial statements of writing off an uncollectible account (after an allowance for doubtful debts has already been established)?
Increases assets, decreases liabilities.
Decreases assets, decreases equity.
No impact on assets, liabilities, or equity.
Decreases assets, increases equity.
Explanation
The write-off reduces the value of Accounts Receivable, but because of the allowance, there is no net effect on assets, liabilities or equity.
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