Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 27 - No. 8)
What is the primary reason for creating an allowance for doubtful accounts?
To reduce the company's tax liability.
To estimate and report the amount of receivables that are unlikely to be collected.
To increase the company's reported earnings.
To show the total amount of all outstanding invoices.
Explanation
This is a necessary step for aligning with the matching principle.
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