Archer Company Has Significant Amounts of Accounts Receivable,and Experiences Uncollectible

question 57

Multiple Choice

Archer Company has significant amounts of accounts receivable,and experiences uncollectible accounts from time to time.Archer uses the percent-of-sales method to account for uncollectible accounts.When Archer Company writes off an uncollectible receivable,what is the effect of that single transaction?

• A) It will reduce net income.
• B) It will have no effect on net income.
• C) It will increase total assets of the company.
• D) It will generate negative cash flow.

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