Accounts receivable had a debit balance of $4,000 at the beginning of the period, and a debit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

a) an increase of $2,000 which will be subtracted from net income

b) a decrease of $2,000 which will be subtracted from net income

c) an increase of $2,000 which will be added to net income

d) a decrease of $2,000 which will be added to net income

Question

Business

Alannah

26 May, 19:51

Accounts receivable had a debit balance of $4,000 at the beginning of the period, and a debit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as:

a) an increase of $2,000 which will be subtracted from net income

b) a decrease of $2,000 which will be subtracted from net income

c) an increase of $2,000 which will be added to net income

d) a decrease of $2,000 which will be added to net income

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Answers (1)

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Lyric Floyd · Answer 1

c) an increase of $2,000 which will be added to net income

Explanation:

Accounts receivable is generally represented by debit balance and any increase in debit balance of accounts receivable will increase the net income of any company/firm/corporation.

In the given scenario, the debit balance of accounts receivable has been increase by $2,000 i. e from $4,000 to $6,000, therefore, the net income will also be increased by $2,000.

Based on the above discussion, the answer shall be c) an increase of $2,000 which will be added to net income