Question

Which of the following transactions does not affect cash during a period?

Write-off of an uncollectible account
Collection of an accounts receivable
Sale of treasury stock
Exercise of the call option on bonds payable

Answer 1

Write-off of an uncollectible account

Step-by-step explanation:

Write off of an uncollectible account does not affect cash. Uncollectibles are outstanding debt amounts that are way overdue and it is unlikely that the debtor(s) will ever pay them back; there are no cash inflows or outflows. Before, the write-off, these debts are considered accounts receivables.Collection of accounts receivable is a cash inflow, sale of treasury stock is also a cash inflow and exercise of a call option on issued bonds(bond payable) is a cash inflow too.