Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 16 - No. 37)
What is the effect of an adjustment on the provision for doubtful debts if the estimated amount of uncollectible debts is increased?
Increase the expense and decrease the liability.
Increase the liability and decrease the expense.
Increase the expense and increase the liability.
Decrease the expense and decrease the liability.
Explanation
An increase in the estimated uncollectible amount means the expense increases and the liability (provision) increases.
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