Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 9 - No. 43)
What best describes why it is prudent to estimate and record a provision for doubtful debts?
Reduces the risk of being declared insolvent.
Provides a more realistic picture of the company's financial position.
Helps in complying with accounting standards.
Helps the business maintain its profitability.
Explanation
The provision helps to give a fair representation of the balance sheet, and also will adhere to the accounting standards.
Comments (0)
