Accounting for IGCSE & O level - Accounting Procedures (Section 13 - No. 3)
What is the effect on profit and the statement of financial position if irrecoverable debts are *not* written off?
Profit is overstated and total assets are overstated.
Profit is understated and total assets are understated.
Profit is unaffected and total assets are overstated.
Profit is overstated and total assets are unaffected.
Explanation
Failing to write off irrecoverable debts overstates both profits and assets.
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