Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 26 - No. 41)
What is the purpose of the 'Allowance for Doubtful Accounts'?
To increase the company's cash.
To estimate the amount of uncollectible receivables.
To recognize revenue.
To report the total amount owed by customers.
Explanation
The allowance for doubtful accounts is used to estimate the amount of accounts receivable that are uncollectible.
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