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?

Question

Quizplus · Accepted Answer

The direct write-off method used by Zorro Company does not comply with Generally Accepted Accounting Principles (GAAP) because it recognizes bad debt expense only when specific accounts are deemed uncollectible, which may not accurately match revenues and expenses in the appropriate periods.

Archer Company and Zorro Company Both Have Significant Amounts of Accounts