Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 5 - No. 35)
When adjusting for the provision for doubtful debts, which of the following statements are true?
The expense will reduce the net profit
The provision appears on the statement of financial position
The allowance is deducted from trade receivables on the statement of financial position
The journal entry involves debiting the allowance for doubtful debts account
Explanation
The provision creates an expense that decreases net profit, and it creates a liability that is presented in the balance sheet.
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