If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in: Multiple Choice An increase in the expenses of the current period. A reduction in current assets. A reduction in equity. No effect on the expenses of the current period. A reduction in current liabilities.

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Business

Waylon

31 August, 13:17

If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off, the entry to record the write-off against the allowance account results in: Multiple Choice An increase in the expenses of the current period. A reduction in current assets. A reduction in equity. No effect on the expenses of the current period. A reduction in current liabilities.

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Karly Grimes · Answer 1

No effect on the expenses of the current period.

Explanation:

Allowance for Doubtful Accounts account is an account that shows loss that has been incurred by the business. These entries are passed into the allowance for doubtful accounts as a debit.

So the normal balance of this account is negative.

If the account is in credit it means the business is not in loss, but rather can absorb some loss equivalent to the balance on the account before loss is recognised.

The credit balance is greater than the bad debt being written off, so it takes the bad debt amount and is still in credit.

The business will not recognise any expense