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What is the primary purpose of the provision for doubtful debts in accrual basis accounting?
  • a)
    To accelerate the recognition of revenues.
  • b)
    To delay the recognition of expenses.
  • c)
    To estimate the amount of bad debts from accounts receivable.
  • d)
    To increase the value of accounts receivable.
Correct answer is option 'C'. Can you explain this answer?
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What is the primary purpose of the provision for doubtful debts in acc...
The provision for doubtful debts is used to estimate the amount of bad debts that will arise from accounts receivable. It allows companies to recognize an expense for probable bad debts as soon as invoices are issued to customers, aligning with the matching principle. This helps in accurately reflecting the financial position of the company and accounting for potential losses due to non-payment of invoices.
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What is the primary purpose of the provision for doubtful debts in accrual basis accounting?a)To accelerate the recognition of revenues.b)To delay the recognition of expenses.c)To estimate the amount of bad debts from accounts receivable.d)To increase the value of accounts receivable.Correct answer is option 'C'. Can you explain this answer? for B Com 2025 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about What is the primary purpose of the provision for doubtful debts in accrual basis accounting?a)To accelerate the recognition of revenues.b)To delay the recognition of expenses.c)To estimate the amount of bad debts from accounts receivable.d)To increase the value of accounts receivable.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the primary purpose of the provision for doubtful debts in accrual basis accounting?a)To accelerate the recognition of revenues.b)To delay the recognition of expenses.c)To estimate the amount of bad debts from accounts receivable.d)To increase the value of accounts receivable.Correct answer is option 'C'. Can you explain this answer?.
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