Zorro Company has significant amounts of accounts receivable and experiences bad debts from time to time.Zorro uses the direct write-off method.When Zorro Company writes off a bad debt,what is the effect of that single transaction?
A)It will increase total assets of the company.
B)It will reduce profit.
C)It will have no effect on profit.
D)It will generate positive cash flow.

Question

Quizplus · Accepted Answer

When a bad debt is written off using the direct write-off method, it reduces the accounts receivable balance and the net income.

Zorro Company Has Significant Amounts of Accounts Receivable and Experiences