Question

Why should an accounts receivable be re-established if it has previously been written off but is...

Why should an accounts receivable be re-established if it has previously been written off but is later collected in full?

Group of answer choices

a. So that assets are not understated.

b. So that the debits equal the credits.

c. So that expenses are not overstated.

d; To restore the credit rating of the accounts receivable/debtor

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Homework Answers

Answer #1

Ans : Option ( D)

To restore the credit rating of the accounts receivable/debtor

Explanation:

1) Account Receivables are nothing but liquid assets of a company.

2) Account Receivables are customers which has purchased goods on credit and amount is yet to be paid.

3) Sometimes customers fails to make payment and their account is written off.

4) But if same customers makes payment in future, their account is re- established because, it will restore the credit of that particular customer.

5) Customers are the core heart of any business, so when we restore the rating, it indicate we will sell the goods to them again in future.

6) Therefore, ( D) is the correct choice.

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