When balancing accounts receivable, which would have no effect?

When balancing accounts receivable, which would have no effect?

• A. Posting to the wrong accounts receivable account
• B. Recording a cash receipt
• C. Applying a payment to the wrong customer's account
• D. Writing off a bad debt

Answer: (A)

Balancing accounts receivable hinges on the total amount owed, which is the AR control account equal to the sum of all customer subaccounts. Any transaction that changes the total owed will affect the AR balance, while a transaction that only shifts amounts between customers within AR leaves the overall total unchanged. Recording a cash receipt reduces the total AR balance because money is collected from customers and cash increases. Writing off a bad debt also reduces the AR balance since an uncollectible amount is removed from receivables. Applying a payment to the wrong customer still reduces the total AR by the payment amount, though it misallocates the payment in the subsidiary ledger. Posting to the wrong accounts receivable account, however, simply reassigns a receivable within the AR system without changing the total amount owed. It moves the balance from one customer to another in the subledger, but the AR control total remains the same. That’s why it would have no effect on balancing AR.

Balancing accounts receivable hinges on the total amount owed, which is the AR control account equal to the sum of all customer subaccounts. Any transaction that changes the total owed will affect the AR balance, while a transaction that only shifts amounts between customers within AR leaves the overall total unchanged.

Recording a cash receipt reduces the total AR balance because money is collected from customers and cash increases. Writing off a bad debt also reduces the AR balance since an uncollectible amount is removed from receivables. Applying a payment to the wrong customer still reduces the total AR by the payment amount, though it misallocates the payment in the subsidiary ledger.

Posting to the wrong accounts receivable account, however, simply reassigns a receivable within the AR system without changing the total amount owed. It moves the balance from one customer to another in the subledger, but the AR control total remains the same. That’s why it would have no effect on balancing AR.