O-LevelAccountingAccounting principles and policies7707/11 · May/June 2024 · Q171 Mark
Why does a trader maintain a provision for doubtful debts? 1. to ensure amounts owing to the business for which payment is unlikely to be received are regarded as an expense 2. to ensure the trade receivables of the business are not overstated, by providing for debts which are unlikely to be paid 3. to identify credit customers who are not able to settle their accounts by the end of the financial year 4. to provide for the amounts from credit customers which are unpaid at the end of the financial year
A1 and 2
B1, 3 and 4
C2 and 3 only
D2, 3 and 4
✓ Correct answer
A: 1 and 2
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