What action increases bad debts expense when an account is written off?

When an account is written off, it directly affects the bad debts expense by formally recognizing that the amount owed will not be collected. Writing off an account means that the business acknowledges that a specific receivable is uncollectible and removes it from accounts receivable. This action involves debiting the bad debts expense account and crediting the accounts receivable account. As a result, it increases the overall bad debts expense recorded on the income statement, reflecting the reality of the company's financial situation concerning uncollectible accounts.

In this context, the writing off does not merely adjust the balance sheets; it acknowledges the financial loss associated with the uncollectible account, thereby capturing the economic impact accurately in the financial reports. This is a key part of proper financial reporting and managing the company's assets and liabilities efficiently.