Archer Company and Zorro Company Both Have Significant Amounts of Accounts

question 111

Multiple Choice

Archer Company and Zorro Company both have significant amounts of accounts receivable at any time,and both experience uncollectible accounts from time to time.Archer uses the percent-of-sales method to account for uncollectible accounts,and Zorro uses the direct write-off method.Which of the following statements is FALSE?

• A) Zorro Company's method complies with GAAP.
• B) Archer Company's method will provide better matching of revenues and expenses.
• C) Archer Company's net income is more accurate due to their accounting method.
• D) Zorro Company's method does not provide good matching of revenues and expenses.

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Definitions:

Product-by-value Analysis

A method for prioritizing products or projects based on their monetary value and impact on the company's goals.

Financial Analysis

The evaluation of a business's financial statements to understand its performance, liquidity, and solvency, among other factors.

Firm's Resources

Assets, capabilities, organizational processes, firm attributes, information, and knowledge that a firm controls and can use to conceive and implement its strategies.

Forecasting Capacity Requirements

The process of predicting the resources (such as machinery, labor, and space) needed to meet product demand at a future time.