Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 22 - No. 41)
What is the relationship between trade receivables and the provision for doubtful debts on the balance sheet?
They are added together to calculate net trade receivables.
They are the same value
They are subtracted; the provision reduces the carrying value of trade receivables.
They are independent of each other.
Explanation
The provision for doubtful debts is subtracted from trade receivables to determine the net realizable value on the balance sheet.
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