uskrxm40
Feb 25, 2008, 12:34 PM
How will a write off affect asset and income growth percentages?
ahar3
Feb 25, 2008, 07:48 PM
Using a cash based system my inventory goes down. As I can not sell the item anymore but have the expense incurred my percentages shrink.
morgaine300
Feb 27, 2008, 05:05 PM
Depends on if you're using a direct write-off method or an allowance method.
Direct write-off removes it from receivable and expenses it on the stop, meaning it's reducing assets (through receivables) and increasing expenses.
Allowance method has an amount "set aside" to use for the write-offs, as a contra asset account. When the write-off is done, it reduces the receivables and reduces the allowance, which just nets out the assets. So it has no overall affect on the assets, nor on the expenses.