Question

Katy Company uses the allowance method. Katy writes off a customer account balance when it becomes clear that the particular customer will never pay. How will this write-off affect the companys net income and accounts receivable turnover ratio?

A) Net income and the account receivable turnover ratio will both decrease.

B) Net income will decrease; the account receivable turnover ratio will not change.

C) Net income will not change; the account receivable turnover ratio will decrease.

D) Net income will not change; the account receivable turnover ratio will not change.

Answer

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