Question

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles

a. Will increase income in the period it is collected.
b. Will decrease income in the period it is collected.
c. Requires a correcting entry for the period in which the account was written off.
d. Does not affect the income in the period it is collected."

Answer 1

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles does not affect the income in the period it is collected.

Step-by-step explanation:

The correct answer is d. Does not affect the income in the period it is collected.

Under the allowance method of accounting for uncollectibles, the collection of an account that was previously written off does not affect the income in the period it is collected. When an account is deemed uncollectible and written off, it is removed from accounts receivable and the allowance for doubtful accounts is adjusted accordingly. Therefore, the subsequent collection of the account does not impact the income statement.