Archer Company Has Significant Amounts of Accounts Receivable, and Experiences

Multiple Choice

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

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