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

question 130

Multiple Choice

Zorro Company has significant amounts of accounts receivable,and experiences uncollectible accounts from time to time.Zorro uses the direct write-off method.When Zorro 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 positive cash flow.