Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 23 - No. 41)
What is the impact on the financial statements of using the allowance method for bad debts?
Assets are overstated and net income is understated.
Assets are understated and net income is overstated.
Assets and net income are presented more fairly.
Liabilities are overstated and net income is overstated.
Explanation
The allowance method gives a more realistic depiction of the financial position.
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