Question

What happens if the amount of uncollectible account expense is overstated at year end?

A : Net Accounts Receivable will be understated.
B : Allowance for Doubtful Accounts will be understated.
C : Stockholders' equity will be overstated.

Answer 1

Answer: The correct answer is "A : Net Accounts Receivable will be understated.".

Explanation: If the amount of uncollectible account expense is overstated at year end the Net Accounts Receivable will be understated.

because it had been estimated that a larger amount of accounts receivable would not be possible to collect, but at the end of the year it turned out that more accounts could be collected than was believed possible.