Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 2 - No. 18)
What is the purpose of a provision for doubtful debts?
To estimate the uncollectible amount.
To allocate the expense to the relevant period.
To account for all amounts owed by customers.
To calculate the total liabilities.
Explanation
The provision is set up to recognize the likely losses that a company is anticipating from customers that may not pay.
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