Zorro Company Has Significant Amounts of Accounts Receivable, and Experiences

Multiple Choice

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