Question

On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the direct write-off method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets?

Answer 1

Answer:

Assuming the direct write-off method is used to account for bad debts, the effects of this write-off have on the company's net income and total assets will be that

Their will be no effect on net income and

Also no effect on total assets.

Explanation:

Ii is mentioned in the question that on date 12th of october of the current year a company has determined that an account should be written off of those customers whose account was receivable and uncollectible.

So,by Assuming the direct write-off method is used to account for bad debts, the effects of this write-off have on the company's net income and total assets will be that

• Their will be no effect on net income and

• Also no effect on total assets.

Direct write off method is based generally on the accounting principles which should ensure that companies require those methods when they use to prepare their financial statements.