Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 37 - No. 34)
What is the primary purpose of creating a provision for doubtful debts?
To increase a company's assets
To reduce a company's liabilities
To account for estimated uncollectible amounts from customers.
To increase a company's equity.
Explanation
The provision is created to reflect the portion of trade receivables that may not be collected.
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