Accounting for IGCSE & O level - Final Statements (Section 10 - No. 34)
What is the effect of writing off a bad debt?
It increases the net profit for the year.
It decreases the value of trade receivables.
It has no impact on net profit.
It increases the provision for doubtful debts.
Selitys
Writing off a bad debt means the company no longer expects to receive payment, so it reduces the value of trade receivables on the balance sheet.