O-LevelAccountingAccounting principles and policies7707/11 · May/June 2021 · Q151 Mark
Why does a business maintain a provision for doubtful debts account?
Ato apply the accounting principle of prudence
Bto avoid profit for the year being understated
Cto have an accurate forecast of debts which will be uncollectible
Dto reduce the expense of irrecoverable debts in the future
✓ Correct answer
A: to apply the accounting principle of prudence
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